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UPDATE 1-German export outlook bleak despite Oct respite

Published 12/09/2008, 02:36 AM
Updated 12/09/2008, 02:40 AM

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BERLIN, Dec 9 (Reuters) - Germany's trade surplus widened in October, suggesting net trade may help growth 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 euros ($20.43 billion) as imports declined more sharply than exports, Federal Statistics Office figures showed on Tuesday. A surplus of 14 billion euros had been forecast.

Sebastian Wanke, an economist at DekaBank, said foreign trade had supported growth at the start of the quarter.

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

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

The October trade surplus was well above the monthly average in the July-September period, implying that net trade would have a positive impact in the quarter if the surplus is maintained.

However, forward-looking indicators show foreign demand for German goods has waned sharply in recent months.

Data on Friday showed German manufacturing orders fell more than six percent 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 Two.

Orders have fallen nearly every month since the end of last year, and sentiment among manufacturers has plummeted.

Adjusted for seasonal swings, exports fell by 0.5 percent month-on-month to 84.5 billion euros, while imports were down 3.5 percent to 68.7 billion euros.

Year-on-year exports rose by 1.4 percent in unadjusted terms. Imports climbed by 5.4 percent.

A breakdown of the figures showed exports to European Union countries outside the euro area -- of which Britain is Germany's biggest trading partner -- were down by 2.1 percent on the year.

The pound has fallen sharply against the euro during the financial crisis, making German exporters' goods more expensive in Britain. Exports were strongest to countries outside the EU, rising by 5.2 percent on the year.

In the first 10 months of the year exports were up by 5.7 percent, while imports rose by 8.2 percent. (Writing by Dave Graham, editing by Mike Peacock)

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