Germany’s exports plunge in first quarter

Bloomberg

Exports dropped 9.7 percent from the fourth quarter and company investment declined 7.9 percent, the Federal Statistics Office said yesterday. Gross domestic product fell a seasonally adjusted 3.8 percent from the previous three months, the office said, confirming an initial estimate from May 15. That’s the steepest drop since quarterly data were first compiled in 1970.

The worst global recession since World War II has exposed Germany’s reliance on exports as an Achilles Heel, forcing companies to slash output and cut jobs. Chancellor Angela Merkel’s government, which expects the economy to contract 6 percent this year, will spend about 82 billion euros ($115 billion) to fight the crisis. German business confidence rose for a second month in May and investors also grew more optimistic, suggesting the economic slump is bottoming out.

"The year’s first three months were certainly the worst," said Ralph Solveen, an economist at Commerzbank in Frankfurt. "The economy probably continued to shrink in the current quarter but that should be followed by a stabilization in the second half."

Consumer spending rose 0.5 percent in the first quarter from the fourth, even as households’ disposable incomes declined 0.9 percent, the statistics office said.

Eckhard Cordes, chief executive officer of Metro, said on May 13 that the retailer "is not part of the economic downturn." The firm will emerge as "a winner" from the recession, he said.