Pride cometh before a fall.
no kidding.
ouch.
German October Exports Drop 6.6%, Most in More Than 10 Years
Dec. 10 (Bloomberg) -- German exports fell 6.6 percent in October, the biggest drop in more than a decade, as the stronger euro curbs foreign demand and risks damping a recovery in Europe's largest economy.
Germany's trade surplus narrowed to 10.8 billion euros ($13.2 billion) from 14.3 billion euros in September, the Federal Statistics Office said. Exports, adjusted for seasonal swings, fell after rising the most in more than a year in September. Economists had forecast a decline of 1 percent, the median of six forecasts in a Bloomberg News survey showed.
The euro, which climbed to a record against the dollar this week, is making German goods more expensive abroad just as the country's economy emerges from three years of stagnation. Volkswagen AG last month said U.S. sales will decline ``significantly'' in 2004, partly due to the stronger currency.
``The currency could become a problem,'' said Tobias Basse, an economist at Norddeutsche Landesbank in Hanover. ``In general, though the recovery will be export-based.''
Imports rose 1.6 percent in October, the statistics office said. The trade surplus was expected to fall to 13.9 billion euros, according to the median of 23 forecasts in a Bloomberg News survey.
Europe's single currency has surged 21 percent against the dollar in the past year and yesterday touched a record of $1.2276. The European Central Bank forecasts that a further euro appreciation would weigh on growth across the currency region, said a person last week who has seen hypotheses included in the bank's latest inflation and growth forecasts.
Stronger U.S. Growth
The effects of a stronger currency on exporters may be offset by the strength of the U.S. recovery. The world's largest economy, destination for about a 10th of German exports, may expand 4.4 percent next year, the most since 1997, according to the median forecast of 62 economists surveyed by Bloomberg News since Nov. 25.
Foreign orders for consumer goods such as Porsche AG's sports cars and Siemens AG's mobile phones surged 13 percent in October, the most in at least 12 years, the Economics and Labor Ministry said last week.
``We are the world champions of foreign trade and the U.S. recovery helps us,'' said Basse.
Fund managers also expect an economic recovery to be fuelled by foreign demand. Germany's benchmark DAX Index has surged 74 percent since dropping to a seven-year low in March, led by exporters including Continental AG, Bayer AG and ThyssenKrupp AG. All three shares more than doubled in the period.
German investor confidence rose to the highest in 3 1/2 years in December, with the stronger euro playing only a ``subordinate role'' in their assessment for the moment, the ZEW Center for European Economic Research said yesterday.
The European Central Bank has signaled it's comfortable with the currency's exchange rate, indicating it has no plans to rein in its appreciation. ECB President Jean-Claude Trichet said last week he favors a ``strong and stable'' currency and Bundesbank President Ernst Welteke said in November the euro is close to its ``long-term average.''
Last Updated: December 10, 2003 02:12 EST
quote.bloomberg.com |
