-Carsten Brzeski, ING economist
German economy is losing momentum, this is not a question, as it is highly dependent on its exports and external demand. Manufacturing, services activity and factory orders all surprised markets to the downside in May. Moreover, none of the reports came above markets' expectations. Furthermore, Ukraine crisis is a massive drag for manufacturers as well. Therefore, it was not a surprise that trade figures for March disappointed investors.
Europe's powerhouse posted its biggest fall in exports in almost a year, while imports fell as well, narrowing the trade surplus and confirming earlier concerns that trade sector will be a drag on growth at the beginning of this year. On Friday, the Federal Statistics Office showed that seasonally-adjusted shipments plunged for a second straight month posting a 1.8% drop over the period, while imports declined 0.9%, resulting in a 14.8 billion euros trade surplus. Analysts were making their bets for a 1% rise in exports and a 0.5% fall in imports. The March trade figures follow a string of weaker-than-excepted German economic indicators. Nonetheless, quarterly growth is projected to remain solid, with vast majority of experts predicting a 1% expansion for the first quarter. However, we will not be surprised if the indicator will fall short of estimates as well. The single currency was little changed after the release of the data, as investors have already priced in disappointing figures from Germany.
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