Germany benefits from demand outside eurozone

Seasonally and price-adjusted orders rose 2.2 per cent on the month compared with a revised 0.6 per cent in February, Economy Ministry data showed yesterday. This was well above a Reuters poll of 42 economists for a modest rise of 0.5 per cent.

The orders were boosted by demand from outside the single-currency bloc, which rose by 4.8 per cent. However, orders from key trading partners in the eurozone, which accounts for 40 per cent of exports, stagnated on the month.

“Today’s German new order data nicely illustrate the eurozone’s dilemma,” said Carsten Brzeski at ING Bank.

“While everyone is talking about growth or the lack of growth, demand for ‘Made in Germany’ is still stable. However, it is demand from Germany and outside the eurozone, not from other eurozone countries,” he said.

Germany’s export driven economy, which bounced back from the 2008/09 financial crisis, contracted slightly at the end of last year on the back of flagging demand.

This is now thought to have been a blip and Germany’s eight leading economic institutes have revised their growth forecasts for this year upwards slightly to 0.9 per cent. The government has stuck to its 2012 forecast of 0.7 per cent.

But renewed worries about the finances of large eurozone economies and austerity measures pushing up unemployment and hampering growth in peripheral countries have choked off demand for Germany’s high-end exports from key trading partners in Europe.

So German companies are increasingly looking to markets outside the eurozone to boost export demand during uncertain times. For example, German luxury car makers BMW and Porsche reported record first quarter profits last week as Chinese demand for sporty sedans and SUVs surged, underlining their growing dependence on Asian customers.