Germany’s trade surplus rose to a record high in September as exports climbed across the board, data showed today, at a time when Europe’s largest economy has come under fire for relying too heavily on foreign trade.
The seasonally adjusted trade surplus widened to €18.8 billion from a revised €15.8 billion in August, surpassing the consensus forecast for it to narrow to €15.5 billion. Until now the record had been €18.7 billion in September 2007.
International criticism has mounted - especially from Washington - that Europe’s bulwark economy must do more to spur domestic demand and that its reliance on exports is hampering Europe’s economic stability and hurting the global economy.
“The record surplus is likely to add fuel to the flames, but I don’t see a problem in them,” said Stefan Schilbe of HSBC Trinkaus, highlighting the differences of views on both sides of the Atlantic.
“With a certain delay, German companies will increase their capacities, which will help our trade partners because more goods and services will be bought from there.”
The US administration reprimanded Germany in strong terms late last month in its semi-annual report to Congress for its economic imbalances. Germany's current account surplus, at €19.7 billion in September, is the biggest in the world.
European Commission president Jose Manuel Barroso used softer language in Frankfurt this week but his message was similar: Germany had "homework" to do on stability in the euro zone.
Conservative politicians in Germany, which has taken over the spotlight from China, were quick to reject the criticism though Chancellor Angela Merkel’s likely future coalition partner agreed more must be done to spur domestic demand.
Seasonally-adjusted exports gained a forecast-beating 1.7 per cent on the month, the Federal Statistics Office data showed, while imports, expected to rise 0.6 percent, fell 1.9 percent.
Exports rose to all trade partners but particularly to the European Union, which bought 5.4 per cent more goods and services from Germany. Exports to the euro zone rose by 4.4 per cent, while to non-euro zone states they climbed 7.2 per cent.
“The economy is getting help from foreign trade,” said Ralph Solveen at Commerzbank. “But I would not cheer massively yet because the previous months were just too bad for that.”
The US Treasury may feel vindicated by the data. Its criticisms come at a sensitive time in bilateral relations with tempers already running high after reports that the United States secretly monitored Dr Merkel’s mobile phone.
Germany received indirect backing today from European Central Bank chief Mario Draghi when he said economic imbalances in the euro zone should be overcome without weakening the region's strongest economies.
Germany argues it has more than halved its current account surplus with the euro zone as a share of gross domestic product since 2007. Trade is expected to subtract from rather than contribute to economic growth in 2013, while domestic demand, albeit still weak, will drive Germany’s modest expansion. (Reuters)
