Carsten Brzeski, chief economist at ING, notes that the German exports (seasonally and calendar adjusted) dropped by 1.3% month-on-month in February, from a flat reading in January, while imports decreased by 1.6% MoM, from +1.5% MoM in January.

Key Quotes

“As a result, the trade balance widened to €17.9 billion in February, only slightly lower than in February 2018. On the year, exports were still some 3.9% stronger than in February 2018. The German export sector is still wrestling with global uncertainty.”

“Looking ahead, there are in our view several factors pointing to another wind of change, this time around for the positive. The trade-weighted exchange rate has lost some 2.5% since the end of 2018 and has dropped to the lowest level since May 2018. Also, recent real-time indicators suggest a rebound in global trade since the start of the year and relief in the trade tensions between the US and China should also benefit German exports.”

“Today’s trade data is yet another disappointment for the German economy. However, chances are high that the February disappointments simply came at the trough of global uncertainties and that some improvement is in the offing.”