Insights

Carsten Brzeski's blog

Germany: Final chapter of strong August

Strong trade data confirms economic surge after the early summer lull.

German trade data just brought more evidence that weaker data in June and July were nothing more than a brief summer lull. Exports increased by a strong 3.1% MoM in August, from 0.2% in July and -2.8% MoM in June. At the same time, imports increased by 1.2%, from 2.4% MoM in July. As a result, the seasonally-adjusted trade balance widened to 21.6bn euro, from 19.3bn euro in July.

While financial markets and the ECB have been discussing the risks of a stronger euro, the country which often claims to be export world champion is still enjoying a strong export recovery. Despite the summer lull, the year 2017 should be the best year for German exports since 2010.

Looking ahead, the biggest risks for the German economy and the export sector come from the outside. Geopolitical risks, a slowdown of the US or UK economy and a deflating eu(ro)phoria could dent the strong growth momentum. However, for the time being, the German economy is enjoying the best of all worlds: strong domestic demand and surging exports.