Eurozone winds hit exports of Germany

BERLIN - Reuters

An employee inspects rolls of steel at the plant in Salzgitter, Lower Saxony. REUTERS photo

Germany’s trade surplus narrowed in October to its lowest level in over half a year as exports posted meager growth in the face of weakening demand from the country’s recession-hit European partners.

The figures added to evidence that Europe’s largest economy will contract in the fourth quarter of the year amid a slowdown in foreign sales, long a driver of German growth. Imports rose 2.5 percent in October, far stronger than a 0.3 percent increase in exports that followed a 2.4 percent decline in September, official data showed.

“The outlook may now be slowly improving with positive signals for Chinese and American growth, but the euro zone recession is likely to continue to weigh on German exports,” Christian Schulz of Berenberg Bank said in a research note. “A falling trade surplus may also weaken GDP growth in Q4 further.” Germany has been an engine of growth throughout the three-year euro crisis, but weakness elsewhere in the EU, where it sells roughly 60 percent of its exported goods, is starting to bite. Last week, Germany’s central bank slashed its growth outlook for next year, forecasting a meager expansion of 0.4 percent.

The downbeat mood was echoed yesterday in the eurozone’s second largest economy. The Bank of France said it expected GDP to dip 0.1 percent in the final quarter from the third, while industrial output unexpectedly shrank in October.