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ECONOMY

Galloping exports continue to drive growth

German exports rose sharply in July compared to the year before, official data showed Wednesday, providing a further boost to Europe's top economy as it bounces back from last year's crippling recession.

Published: 8 September 2010 10:48 CEST
Galloping exports continue to drive growth
Photo: DPA

And although the pace of export growth slowed slightly compared to the month before, analysts said that exports would continue to be an important driver in Germany, the world’s second largest exporter, in the second half of the year.

Exports rose by 18.7 percent compared to July 2009, the national statistics office said in a statement, with a total of €83 billion of goods exported.

Imports also rose sharply, registering a 24.9-percent gain on the previous year with €69.5 billion of goods brought into the country.

Germany’s trade surplus of €13.5 billion was slightly lower than at the same time in 2009 but a fraction higher than the €13.1 billion economists at Dow Jones Newswires had forecast.

In June, exports soared by 28.4 percent compared to the previous year. The absolute value of goods exported (€86.4 billion) was the highest monthly value since October 2008, the statistics office said.

Compared to this month, exports declined by 1.5 percent in July and imports by 2.2 percent.

Carsten Brzeski said exports were bound to slow after the stellar performance in June but this did not presage a decline.

“All in all, after the strong surge in the second quarter, German exports are now normalising,” the analyst said.

“However, normalising does not mean stagnation. Even at a slower pace, the export sector should remain an important growth driver.”

A breakdown of the export figures showed that other European Union countries snapped up €48.6 billion worth of German goods, with €34.4 billion going to third countries.

With the economic climate in the country improving significantly, the German federation of exporters (BGA) on Tuesday doubled its forecast for exports in 2010 to growth of around 10 percent.

“Firms have shaken off their state of shock caused by the economic collapse in the previous year,” said BGA chief Anton Börner.

Germany experienced its worst recession in more than six decades last year, but has bounced back strongly, predominantly on the back of improved global demand for its exports.

Europe’s economic powerhouse registered sizzling growth figures of 2.2 percent in the second three months of the year and is expected to achieve output over the year of around three percent.

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ECONOMY

How is Denmark’s economy handling inflation and rate rises?

Denmark's economy is now expected to avoid a recession in the coming years, with fewer people losing their jobs than expected, despite high levels of inflation and rising interest rates, The Danish Economic Council has said in a new report.

Published: 30 May 2023 15:46 CEST
How is Denmark's economy handling inflation and rate rises?

The council, led by four university economics professors commonly referred to as “the wise men” or vismænd in Denmark, gave a much rosier picture of Denmark’s economy in its spring report, published on Tuesday, than it did in its autumn report last year. 

“We, like many others, are surprised by how employment continues to rise despite inflation and higher interest rates,” the chair or ‘chief wise man’,  Carl-Johan Dalgaard, said in a press release.

“A significant drop in energy prices and a very positive development in exports mean that things have gone better than feared, and as it looks now, the slowdown will therefore be more subdued than we estimated in the autumn.”

In the English summary of its report, the council noted that in the autumn, market expectations were that energy prices would remain at a high level, with “a real concern for energy supply shortages in the winter of 2022/23”.

That the slowdown has been more subdued, it continued was largely due to a significant drop in energy prices compared to the levels seen in late summer 2022, and compared to the market expectations for 2023.  

The council now expects Denmark’s GDP growth to slow to 1 percent in 2023 rather than for the economy to shrink by 0.2 percent, as it predicted in the autumn. 

In 2024, it expects the growth rate to remain the same as in 2003, with another year of 1 percent GDP growth. In its autumn report it expected weaker growth of 0.6 percent in 2024.

What is the outlook for employment? 

In the autumn, the expert group estimated that employment in Denmark would decrease by 100,000 people towards the end of the 2023, with employment in 2024  about 1 percent below the estimated structural level. 

Now, instead, it expects employment will fall by just 50,000 people by 2025.

What does the expert group’s outlook mean for interest rates and government spending? 

Denmark’s finance minister Nikolai Wammen came in for some gentle criticism, with the experts judging that “the 2023 Finance Act, which was adopted in May, should have been tighter”.  The current government’s fiscal policy, it concludes “has not contributed to countering domestic inflationary pressures”. 

The experts expect inflation to stay above 2 percent in 2023 and 2024 and not to fall below 2 percent until 2025. 

If the government decides to follow the council’s advice, the budget in 2024 will have to be at least as tight, if not tighter than that of 2023. 

“Fiscal policy in 2024 should not contribute to increasing demand pressure, rather the opposite,” they write. 

The council also questioned the evidence justifying abolishing the Great Prayer Day holiday, which Denmark’s government has claimed will permanently increase the labour supply by 8,500 full time workers. 

“The council assumes that the abolition of Great Prayer Day will have a short-term positive effect on the labour supply, while there is no evidence of a long-term effect.” 

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