By: Dr. Mike Campbell

Germany has long been regarded as the powerhouse of Europe and is one of the world’s leading exporting nations. However, in a global economy, a nation’s success is dependent upon how its trading partners are faring, Month-on-month figures just released for the German economy show that exports have declined by 1.8%. This follows hard on the heels of a 1.2% decline in June. Germany also imported less in July with the figure falling by 0.3%.

Analysts had been predicting that German exports would soften by just 0.1% in July and that imports would rise by 0.2%, so the real data comes as a shock. The data confirms a report from a leading financial information group, Markit, which suggested that the German service and manufacturing sectors were growing at their most sluggish rate for two years in August. This being the case, the figures for exports in August are also likely to be weak.

The German economy is still expanding, but only just, with Q2 GDP coming in at 0.1%. According to Germany’s Federal Statistics Office, the nation’s trade surplus has fallen from €11.5 billion in June to €10.1 billion for July (the data is seasonally adjusted) as a result of the decline in exports.

According to Christoph Weil, an economist at German bank Commerzbank, whilst exports have certainly slowed, Germany is still expected to post a 0.5% growth figure for the third quarter. In his opinion, the export data shows that risks to the German economy come from the global economy rather than any weakness in domestic demand.