Industry in Germany and France stumbles on China's troubles
BERLIN/PARIS: German imports grew faster than exports in November and French factory production slowed more than expected, suggesting a slowdown in emerging markets is complicating economic recovery in the euro zone.
The German trade data also pointed to a shift in Europe’s biggest economy away from a reliance on exports and toward more consumer-driven growth as demand from China and Russia wanes. Seasonally adjusted exports rose 0.4 percent in November, undershooting expectations in a Reuters poll of a 0.7 percent increase.
Imports grew by a stronger-than expected 1.6 percent, narrowing the trade surplus to 19.7 billion euros ($21.4 billion), data from the Federal Statistics Office showed. As demand from other emerging markets wanes, the German government expects imports to rise at a faster rate than exports throughout 2016.
This means net foreign trade is likely to hinder growth, a remarkable development for an economy that for decades has relied on exports, led by its engineering and auto sectors. Record-low borrowing costs, rising demand for property and higher state spending to house an unprecedented influx of refugees have led to a construction boom in Germany.
In 2015, the authorities registered over 1 million new arrivals. Further boosting consumer purchasing power, collectively agreed wages last year rose by 2.4 percent in real terms, the strongest pace since at least 15 years, the WSI economic institute said on Friday. Economic data on Thursday also showed that healthy domestic demand fueled a bigger-than-expected rise in German industrial orders in November.
Other euro zone countries and the International Monetary Fund have often suggested that the bloc would benefit from major exporter Germany putting more emphasis on consumer-driven growth, hoping this would pull in imports from its partners.
However, trade trends in Germany do not provide firm evidence, at least at this point, that such a rebalancing in the euro zone is under way, analysts said. Bankhaus Lampe chief economist Alexander Krueger said industrial production was floppy due mainly to slowing global growth, particularly in China and other emerging markets.
Martin Wansleben, managing director of the DIHK chambers of commerce, told Reuters that China’s weaker growth rate was impairing export prospects, but this would not throw the German economy as into a recession.