The Euro has weakened against the British Pound and erased gains against the US Dollar after data showed that German exports fell at a higher rate than economists had been expecting, reinforcing the picture that the Eurozone is struggling to drag itself out of recession.
According to the Federal Statistics Office exports out of the Eurozone’s largest economy fell by 1.5% in February, declining from January’s gains of 1.3%. Economists had been predicting a decline of just 0.3%. Imports into Germany also fell by 3.8% highlighting the weakening demand from German consumers as the Euro crisis continues to affect the region.
The German economy is expected to show signs of retuning to growth in the first quarter of 2013 but renewed concerns caused by the botched bailout of Cyprus and the ongoing political stalemate in Italy could have caused disruption to the German economy.
“The export-driven manufacturing sector, which accounts for roughly a quarter of German gross domestic product, has not fully turned around yet,” said a senior European economist at Berenberg Bank in London. “While much of the Eurozone remains in serious recession, Germany will have to rely on domestic demand and exports to stronger economies such as China and the U.S. for a growth rebound.”
The data shows that shipments from Germany to the wider Eurozone fell by 4.1% compared to the previous year and declined by 3.4% to the wider European Union. Despite the declines in European trade, Germany was still able to create trade surplus. It rose from 13.6 billion Euros in January to 16.8 billion Euros in February.
“While it’s clear that Germany can’t de-couple itself from the euro area, the rest of the world is proving relatively stable,” said Johannes Gareis, an economist at Natixis in Frankfurt. “That’s helped make up for the weakness in Europe.”
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