German Exports Decline as Slowing Global Growth Cools Demand

By Christian Vits

Dec. 9 (Bloomberg) -- Exports from Germany, Europe’s largest economy, fell in October as cooling global growth curbed demand.

Sales abroad, adjusted for working days and seasonal changes, slid 0.5 percent from September, when they rose 0.8 percent, the Federal Statistics Office in Wiesbaden said today. Economists expected a drop of 1.1 percent, the median of 10 forecasts in a Bloomberg News survey showed.

Companies are grappling with a slowdown in the economies of their main trading partners as the global financial crisis erodes demand. Manufacturing orders slumped in October as European sales of plant and machinery collapsed. The Bundesbank last week predicted the deepest German recession in 16 years for next year.

“Exports are going to the dogs as neighboring countries are hit by the financial crisis,” said Jens Kramer, an economist at NordLB in Hannover. “The outlook is anything but good. The foreign trade contribution to economic growth will be negative in the next three to four quarters as exports collapse.”

The German economy contracted 0.5 percent in the three months through September. The Bundesbank said last week it is likely to shrink for a third successive quarter in the final three months of this year and will start next year from an “already depressed level.” The bank expects the economy not “to pick up again until the projected global economic upturn in 2010.”

Confidence Slumps

German business confidence slumped to the lowest level in almost 16 years in November and the VDMA machine makers lobby said last week that orders for plant and machinery dropped 16 percent in October from a year earlier, led by a decline in export demand.

In the year, exports rose 1.4 percent, today’s report showed. Imports declined 3.5 percent from September and gained 5.4 percent from a year earlier. The trade surplus widened to 16.5 billion euros ($21 billion) from 15 billion euros in September. The surplus in the current account, the measure of all exports including services, was 15 billion euros.

German automakers including Bayerische Motoren Werke AG and Stuttgart-based Daimler AG have cut production by more than 200,000 vehicles this year. Daimler’s Mercedes is also in talks with its workers about shorter hours next year. The global credit crunch and recessions in the U.S. and Europe have plunged the auto industry into what General Motors Corp. has called the worst crisis since World War II.

Shipments to countries outside the European Union rose 5.2 percent from a year earlier, today’s report showed. Exports to other EU member states declined 0.6 percent. Imports from within the EU trade bloc increased 4.1 percent from October 2007.

The economy of the 15 euro nations, which buy over 40 percent of Germany’s exports, will probably shrink 0.5 percent next year after growing 1 percent in 2008, the European Central Bank said last week.

To contact the reporter on this story: Christian Vits in Frankfurt at cvits@bloomberg.net