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Decline in August: German exports are shrinking unexpectedly strong


Bad news from a sector that used to be reliable: Foreign trade is no longer driving the German economy, exports have fallen even more sharply in August than experts had predicted.

German exports lost even more momentum in August than expected. They fell by 1.8 percent compared to the previous month and thus more than since April no more, said the Federal Statistical Office. Economists had expected a decline of 1.0 percent, after a plus of 0.8 percent in July. In comparison to the same month of August 2018, exports even fell by 3.9 percent.

In contrast, imports from abroad rose by 0.5 percent in August compared to the previous month. The export-dependent German economy is causing the tariff conflicts, the global economy and the hanging around the Brexit.

In view of the gloomy prospects, German exporters have lowered their forecast. The wholesale association BGA expects the current year only with a growth of exports of a maximum of 0.5 percent. Before the trade dispute with China and the EU, sparked by US President Donald Trump, German industry had posted much higher growth rates.

Economic growth is weakening

The current figures are in line with the news of the past months: After years of decent growth, the economy has cooled significantly. Meanwhile, the leading economic research institutes are also very skeptical about the economic development.

Gross domestic product (GDP) will only increase by 0.5 percent in 2019 and by 1.1 percent in 2020, the institutes judge in their autumn report published last week. In the spring, the institutes had assumed growth of 0.8 and 1.8 percent.

"The industry is in recession, its production has been declining for a good one and a half years, which is significant for the economic weakness," it says in the report.

This slump has triggered a debate in Germany on budgetary policy: parts of the SPD and numerous economists are calling for a departure from the "black zero", ie a state budget without new debt. Instead, the federal government would have to spend more money to stimulate the economy.

More on the topic at SPIEGEL + : We save ourselves broken

Source: spiegel

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