German trade surplus soars to all-time high despite easing in exports

FRANKFURT (AFP) - Germany's trade surplus soared to a new record high last year, although export momentum tailed off at the end of the year.

Europe's biggest economy notched up a trade surplus of 198.9 billion euros (S$343.2 billion) last year, the highest since foreign trade data have been compiled. In 2012, the surplus had stood at 189.8 billion euros.

Germany has come under fire for its booming trade surplus, with critics arguing that its economic prowess comes at the expense of the euro zone's weaker members.

The critics argue that Germany needs to boost domestic demand and so help its partners in the European Union by spurring export-driven growth in their economies rather than continue to rely mostly on its own exports for growth. Berlin, however, has persistently dismissed the criticism, arguing that the high surplus reflects the competitiveness of German firms.

Total exports slipped by 0.2 per cent over the year as a whole, while overall imports fell by 1.2 per cent. Exports to the euro area, however, were down 1.2 per cent, whereas imports from the euro zone slipped only fractionally by 0.2 per cent, statistics firm Destatis calculated.

Exports to the wider EU edged up by 0.1 per cent, while EU imports grew by 0.8 per cent.

A closer look at the monthly data showed that export momentum has also been tailing off at the end of the year, In raw or unadjusted terms, the trade surplus narrowed to 14.2 billion euros in December from 19.1 billion euros in November. And in seasonally adjusted terms it decreased to 18.5 billion euros in December from 18.9 billion euros in November.

Berenberg Bank economist Christian Schulz said the Destatis data paint an incomplete picture because imports from China, for example, which reach Germany via another euro zone country such as the Netherlands are counted as imports from the euro zone.

"But the trend towards rebalancing is clear nonetheless and also reflected in data from the Bundesbank that adjusts for the country of origin," Mr Schulz said.

He said the outlook for German trade this year was "mixed".

"Strengthening export markets in the developed world could be offset by weaker demand in those emerging markets currently in turbulence. As long as China stays apart, the impact might be limited," he said. "But the trade surplus looks set to stabilise or even shrink as stronger domestic demand should boost imports more than strengthening global demand will increase exports."