German exports fell 5.2% in August compared with the previous month, although they advanced 5% in annual terms, as indicated Thursday the Federal Statistical Office (Destatis) on the basis of provisional data. This is the biggest drop since January 2009, during the global financial crisis and is a sign of the weakening global economy, which is going through a period of turbulence by the slowdown in emerging countries (BRICS). The data is also clearly worse than estimates Bloomberg team of economists who expected a decline of 0.9% month to month.
In August, the first economy of the European Union (EU) has sold goods and services across borders of 88,000 million euros said Destatis. In annual data, exports to the rest of the EU increased by 3.5%, although with clear differences between countries outside the eurozone, which advanced by 2.1%.This difference is exacerbated by the weakening of the euro against the dollar, which lowers sales to states that do not have the euro as their currency.
The slowdown in sales outside Germany is penalized by the slowdown in the Chinese economy, its third-largest trading partner, and the rest of the emerging bloc. If the sample is enlarged into the July data, the fall in exports to countries outside the EU up to 13% are also taken into consideration. These bad news are added to the growing concern about the German economy, vital for the whole of the EU and: the consensus of the largest analyst corporations in the country have lowered from 2.1% to 1.8% the growth forecast for this year.
“It is a sharp drop, nothing unusual. The weakness of China, Brazil, Russia and other emerging markets is having an impact,” said the head of Nordea, Holger Sandte economist told Reuters. Although the view of this analyst is the major opinion in the market, other brokerage houses like The Economist Intelligence Unit disagree and insist on the strength of German foreign sales. “The month drop is the biggest since the financial crisis, but other indicators suggest the prospect of reasonable growth,” he says. Its analysts also affect the seasonal component. “We should read far beyond this figure.”
Europe’s largest economy and the fourth largest accumulated a surplus of 15,300 million euros in August,, compared with 13,900 million recorded in the same month last year. Corrected for seasonal and calendar effects, the German surplus stands at 19.600 million.
As we can see there are different opinions and expectations about the future of the German economy, the Volkswagen scandal is not going to help Germany to get those levels of confidence back if European policies are not changed in favor of all countries. Or maybe if a real union of all states took place, giving away their sovereign status as countries and be part of Europe as a block. So Germany would stop having those privileges and the rest will start to take part into the decision process.