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TRADE

German trade increases more than expected

Germany's trading activity got off to a strong start this year with exports and imports rising in January, official data showed on Monday.

German trade increases more than expected
Photo: DPA

Europe’s biggest economy exported €91.9 billion ($119.6 billion) worth of goods in calendar and seasonally-adjusted terms in January, an increase of 1.4 percent from December, the national statistics office Destatis said.

That was much better than the 0.5 percent increase that analysts had been expecting. Imports rose even faster, adding 3.3 percent to €76.2 billion.

That meant the seasonally-adjusted trade surplus declined to €15.7 billion in January from €16.9 billion in December, statisticians calculated.

On a 12-month basis, the unadjusted trade surplus expanded slightly to €13.7 billion in January compared with €13.2 billion a year previously, as exports grew by 3.1 percent year-on-year while imports advanced by 2.9 percent, Destatis said.

While exports to eurozone countries edged up only 0.4 percent, imports from Germany’s eurozone partners rose by 2.8 percent.

And that, for Berenberg Bank economist Christian Schulz, suggested that a healthy rebalancing of trade within the single currency area was underway, with Germany now halving its trade surplus with its eurozone partners since 2008.

“Germany is helping its friends,” Schulz said.

“German domestic demand is one of the stabilising forces in the eurozone’s adjustment crisis. Stronger German demand allows the eurozone crisis economies to export more to Germany,” Schulz argued.

Natixis economist Johannes Gareis also welcomed the better-than-expected trade data.

“In seasonally adjusted terms, German exports surprised to the upside and German imports surprised even more,” he said.

“All in all, January’s slight increase in exports is good news for German growth in the first quarter in 2013. The rise in imports should be interpreted as a good sign, too, as it indicates that German domestic demand is quite robust amid the euro zone crisis,” the expert said.

AFP/hc

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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.

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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