German recovery on track as imports, exports rise in January

Economic recovery in Germany appears to be on track as demand for German-made goods increased both at home and abroad, official trade data showed on Tuesday. After adjustment for seasonal blips, Germany exported goods worth 94.5 billion euros ($131 billion) in January, an increase of 2.2 percent from the level inDecember, the federal statistics office Destatis said. And imports -- a yardstick of domestic demand -- rose even more strongly, climbing 4.2 percent to 77.3 billion euros. Because imports rose more strongly than exports, the trade surplus -- the balance between imports and exports -- narrowed. Germany's booming trade surplus has been the target of a great deal of international criticism in recent months, with critics arguing that its economic prowess comes at the expense of the eurozone's weaker members. The critics argue that Germany needs to boost domestic demand and so help its EU partners by spurring export-driven growth in their economies rather than continue to rely mostly on its own exports for growth. But the latest trade data, with the strong increase in imports, appear to suggest such criticisms are misplaced. While German exports to its eurozone partners rose by 3.2 percent year-on-year in January, exports to countries outside Europe jumped by 9.1 percent. And imports from the euro area climbed by 4.0 percent, while imports from outside Europe contracted by 1.9 percent. "The euro area economy continued to stabilise at the start of the year," said BayernLB economist Stefan Kipar. "Today's data were better than expected, not just because exports rose more strongly than expected, but also because exports to the eurozone were positive," Kipar said. "The sharp rise in imports is similarly positive because it points to a pick-up in domestic demand and takes ammunition away from the heated debate about the German current account surplus," the expert said. Natixis economist Johannes Gareis said the trade data were "in line with our expectations of a strengthening global recovery, while German imports growth remains robust due to Germany's healthy domestic economy." Gareis noted that the dynamic of imports in January was driven mainly by German demand for goods from its eurozone neighbours. "In this respect, the data offer some relief for the German growth locomotive to do more to rebalance the euro area," Gareis said. Last week, the EU Commission in Brussels said that Germany's huge current account surplus is a source of economic imbalance in Europe.   "Nobody wants to criticise Germany for having a strong external demand and competitiveness," the EU's Commissioner for Economic and Monetary Affairs Olli Rehn said on the presentation of a new report. "I want see every EU member states be as competitive as Germany," he said. But "at the same time, Germany -- and to some extent the rest of Europe -- would benefit from stronger domestic investment and reinforced domestic demand in Germany," Rehn said.