German exports rebound as industrial output slips
Figures published by the Federal Statistics Office indicate that the soaring trade surplus was driven largely by a solid uptick in exports to Asia. The surplus surged to 13.9 billion euros ($20.1 billion) from 12.4 billion in June.
German exports rose to 70.5 billion euros in July from 67.9 billion in June, while imports stagnated at 56.6 billion euros.
Recent business confidence indicators, retail sales and industrial orders also point to an upturn in the second half of the year.
Industrial production, however, fell 0.9 percent on the month, according to provisional data released by the Economics Ministry.
The construction sector index also fell by 2.3 percent in June demonstrating that "the recovery remains fragile," Ben May, an economist at Capital Economics, told the DPA news agency. But May added that although the output data was disappointing "the economy still seems on track to expand modestly in the third quarter."
Recovery depends on access to credit
However, Anton Boerner, the president of Germany's National Wholesale, Foreign Trade and Services Association (BGA), warned against any euphoria, noting that the trade surplus was still substantially lower than the same period a year ago. German exports in July, he said, were 25 percent below the level of 2008.
"The overall economic environment for German exports worldwide remains tenuous and the steep drop in imports from third countries indicates that the German economic engine has yet to gather speed," Boerner said.
"The most important thing now is to strengthen the basis for economic recovery; first and foremost, access to credit under acceptable conditions."
"The additional liquidity made available to banks by the German government still needs to trickle down to small and medium-sized businesses," Boerner added.
Ultimately, however, says ING senior economist Carsten Brzeski, "for more sustainable growth, Germany will need to shift toward a better balance between domestic and foreign demand."
(DPA/AP/AFP)