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German exports drop 6.3% in Dec, suggesting slowing economy

German exports drop 6.3% in Dec, suggesting slowing economy
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By Reuters
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By Maria Martinez

BERLIN -German exports fell more than expected in December amid high inflation and market uncertainty, suggesting a slowing down in Europe's largest economy despite fading supply chain problems.

Exports fell by 6.3% on the previous month, data from the federal statistics office showed on Thursday, nearly double analysts' expectations for a 3.3% drop in a Reuters poll.

Imports slumped 6.1%, against forecasts for a drop of just 0.8%.

"These data add to the evidence that overall economic activity in Germany is now slowing," Pantheon Macroeconomics' chief euro zone economist Claus Vistesen said.

A significant contraction in trade volumes is usually a classic sign of more broad-based economic weakness in Germany, Vistesen said.

"The massive decline in exports is symptomatic of a challenging year for German foreign trade," Melanie Vogelbach, managing director of international economic policy at the German Chamber of Commerce and Industry (DIHK), said on Thursday.

Supply chain problems, huge price increases and geopolitical risks were taking their toll on exporting companies, she said.

In 2022 as a whole, exports were up by 14.3% from the previous year after calendar and seasonal adjustments. Imports rose much more strongly, by 24.3%, driven by increased energy prices due to the war in Ukraine.

As a result, Germany's export surplus declined for a fifth consecutive year in 2022. The foreign trade balance fell to a surplus of 10.0 billion euros in December, from 10.9 billion euros in November, in calendar and seasonally adjusted terms.

Imports from Russia rose 6.5% in 2022 compared with 2021, to a total of 35.3 billion euros. Imports grew mainly due to high oil and gas prices.

Exports to Russia fell 43.7% in 2022 compared with the previous year, as sanctions targeting Moscow for the war in Ukraine took their toll on once-close ties.

Most German exports went to the United States in December 2022, with goods exports down 10.0% on November 2022 after seasonal and calendar adjustment. This shows the importance of the United States as a trading partner for Germany.

German Economy Minister Robert Habeck and French Finance Minister Bruno Le Maire head to Washington next week to press concerns about U.S. climate subsidies.

One focus of the Franco-German trip is to seek treatment for Europe comparable to that of Mexico and Canada under the U.S. Inflation Reduction Act, so that European companies can benefit from new electric vehicle tax credits.

The statistics office publishes a detailed report with more economic data.

($1 = 0.9088 euros)

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