Foreign trade to drag on Germany

Export powerhouse Germany expects foreign trade to be a drag on economic output this year as the eurozone crisis saps demand in neighbouring states, although consumers at home should support growth.
By The Newsroom
Published 17th Jan 2013, 06:00 BST

Exports will likely grow by 2.8 per cent this year while imports will probably climb by 3.5 per cent, a result which would subtract 0.1 percentage points from gross domestic product (GDP), the Economy Ministry said yesterday in its annual report. In 2012, trade boosted GDP by 1.1 percentage points.

“The German economy is increasingly feeling the burden of weaker global economic development and in particular the crisis of confidence in the eurozone,” Economy Minister Philipp Roesler said.

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Germany has traditionally been an export-driven economy but shipments abroad have declined as some countries in the eurozone, where Europe’s economic powerhouse sends 40 per cent of its exports, linger in recession and markets further afield like the US and China suffered a slow- down.

Mr Roesler said exports had been driven by demand from non-eurozone countries and added that he expected that to continue.

This year private consumption is seen contributing 0.6 per cent points to GDP as the labour market remains robust, wages rise further and inflation continues to be moderate.

The ministry slashed its growth forecast for 2013 to 0.4 per cent from the 1.0 per cent it had predicted in October, blaming a weak winter half-year.

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