German export outlook bleak

Germany's trade surplus widened in October, suggesting net trade may support the economy in the final quarter, but the outlook for exports remains bleak with orders for German goods falling sharply in recent months.

Adjusted for seasonal swings, the trade surplus rose to €15.8 billion as imports declined more sharply than exports, Federal Statistics Office figures showed yesterday. A surplus of €14 billion had been forecast.

The October trade surplus was well above the monthly average in the July-September period and Sebastian Wanke, an economist at DekaBank, said foreign trade had supported the German economy at the start of the quarter.

However, forward-looking indicators show foreign demand for German goods has crumbled since the start of the year, and the latest data underlined the weakness of economies such as Britain, Germany's biggest trading partner.

"We will see a significant decline," Mr Wanke said. "It's just going to come a bit later than we thought."

Data on Friday showed German manufacturing orders fell more than six per cent in October after a record decline the previous month, stirring fears that the German economy could next year face its biggest contraction since World War II.

Net trade in the third quarter shaved some 1.7 percentage points off gross domestic product (GDP), which contracted by 0.5 per cent, putting Germany into recession.