A rise in German imports outstripped a modest gain in exports in June, data showed yesterday, narrowing the trade surplus as Europe’s largest economy ended the second quarter struggling to maintain its strong momentum from the start of the year.
Soft industry orders and uncertainty generated by Britain’s vote in June to leave the European Union are clouding the business outlook, meaning foreign trade, once Germany’s growth engine, is unlikely to inject fresh dynamism into the economy.
Some German companies are holding off making investments in Britain until they know more about the post-Brexit relationship the country will forge with the rest of Europe.
Seasonally adjusted exports were up 0.3% on the month, yesterday’s data from the Federal Statistics Office showed.
This came after a 1.8% fall in May, which was the steepest drop in nine months.
Imports rose 1% on the month, the data showed, more than double the median forecast of economists polled by Reuters.
“In the second quarter, there was no economic stimulus from foreign trade,” said Stefan Kipar, economist at BayernLB. “The strong performance in the first quarter cannot be maintained. But we won’t see an economic slump. We don’t expect that for the third quarter either.”
The strong rise in imports in June narrowed the seasonally adjusted trade surplus to €21.7bn ($24.03bn) from a revised €22.1bn in May.
A Reuters poll points to growth of just 0.3% in the second quarter, figures for which are due on August 12. In the first quarter, the economy expanded by 0.7%, more than doubling its growth rate as higher state and household spending, as well as rising investment on construction and capital goods, offset a drag from foreign trade.
Reflecting on a challenging global trading environment, Siemens chief executive Joe Kaeser said last week the industrial group would need to respond rapidly to a world beset by risks, as illustrated by recent attacks in Nice and Munich, an attempted coup in Turkey and Britain’s vote to leave the EU.