Business | Economy
Slump sparks record German export drop
German exports posted a record fall in November as demand for cars and others mainstays of the manufacturing economy plummeted, deepening worries about the country's already bleak outlook for 2009.
- Reuters
- Published: 23:38 January 8, 2009
- Image Credit: AP
- A container ship at the loading terminal in the harbour of Hamburg, northern Germany.
Berlin: German exports posted a record fall in November as demand for cars and others mainstays of the manufacturing economy plummeted, deepening worries about the country's already bleak outlook for 2009.
Adjusted for seasonal swings, exports fell by an unprecedented 10.6 per cent month-on-month in November, Federal Statistics Office figures showed yesterday.
It was the biggest monthly drop since reunification in 1990, sending the euro briefly lower against the dollar and the pound.
Germany, Europe's largest economy, has been the world's biggest exporter of goods since 2003. Unicredit analyst Alexander Koch said the figures were 'horrible'.
"Global demand is collapsing. It's not helping that German companies are basically in good shape and highly competitive. The data show that trade will weigh massively on growth in the fourth quarter," Koch said.
Axel Nitschke, head of foreign trade at the German chambers of industry and commerce (DIHK), said the future looked grim given the problems being suffered by the automobile industry. "December's [trade] figures will be even worse," he said.
German carmakers such as Daimler and Volkswagen have already carried out or considered cuts to production to compensate for weak demand.
Earlier this week, Daimler said its Mercedes-Benz cars division saw a 23.5 per cent decrease in US sales in December.
Deutsche Bank has predicted the German economy could contract by up to 4 per cent this year - which would been more than four times as bad as the country's previous post-war nadir.
If this were to come about, German unemployment could double to around 6 million, Goldman Sachs has forecast.
Imports also fell, dipping 5.6 per cent on the month, meaning Germany's adjusted trade surplus shrank to 10.7 billion euros from 15.8 billion in October, the Office said. A surplus of 14.5 billion euros had been forecast in a Reuters poll.
The figures showed demand for German goods was weakest from European Union countries outside the euro area - like Britain.
The pound fell sharply against the euro in the run-up to Christmas making German goods more expensive in Britain. Exports to non-euro zone EU countries fell by 16.1 per cent on the year. They fell 7.8 per cent to non-EU countries.
Germany entered recession last year, and the weak export figures have raised the likelihood of another cut in European Central Bank interest rates - at 2.5 per cent - next Thursday, said Commerzbank economist Joerg Kraemer.
The fourth quarter would probably see German gross domestic product contract by two percent quarter-on-quarter, he added.
"Today's dramatic decline in exports supports those within the ECB council who prefer to cut rates already next Thursday by 50 basis points," Kraemer said. "For 2009 as a whole we continue to expect German GDP to decline between 2 and 3 per cent."
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