German export boom could soon lose momentum

"Competition with the U.S. in international markets will be tougher," the president of German Wholesale and Foreign Trade Association, Anton Boerner, told the German daily Die Welt this month after the euro rebounded by about 15 per cent from an all-time low last October.

In the meantime, Germany's Chamber of Commerce and Industry also forecast that exports would record more sober growth patterns in the coming 12 months, with one official describing 2000 as "a special year". Riding on booming exports, the German economy grew 3.1 per cent last year to hit its highest growth rate in a decade, with official figures released by Germany's Statistical Office last week showing exports bounding ahead by 27.3 per cent year-on-year in October.

This was the same month that the euro dropped to a record low of almost 82 cents against the dollar with exports from Germany to the U.S. escalating by 28.3 per cent year-on-year in October. The latest batch of German economic figures also coincides with expectations that economic growth in both Europe and Germany - which represents about one third of the 12-member eurozone's output - will withstand the widely forecast slide in the global and U.S. economic growth.

This is partly because the link between eurozone equity markets and consumption and investment is not as strong as in the U.S., but also because of the high levels of trade between 15 member European Union (E.U.) partners. In the case of Germany, some 60 per cent of its share of trade is with its E.U. partner states. German exports to Asia in particular boomed last year. With the euro down almost 30 per cent against the dollar in October, German exports jumped by a whopping 88 per cent to China year-on-year during the month.

Meanwhile, German exports to Japan and South East Asian states leapt by about 43 per cent, with the German export sector also benefiting from a weak euro against the yen and a solid economic performance in parts of Asia. More specifically, leading German export sectors have been reporting robust data. Indeed, Germany's key luxury car groups have shown themselves relatively immune to the downturn underway in both the world and the U.S. car markets with DaimlerChrysler AG saying that sales of its Mercedes-Benz cars and Smart compact autos rose 6 per cent last year.

Likewise, the Munich-based BMW AG said sales of its luxury cars rose by almost 10 per cent last year with Volkswagen's Audi cars rising by three per cent. In the meantime, Germany's mechanical engineering industry has announced a strong 19 per cent rise in orders in November compared to the same month last year, with foreign orders up 34 per cent.

German chemical exports have also chalked up strong gains recently, rising 13 per cent last year with the president of the nation's Chemical Industry Federation (VCI), Manfred Bayer, saying last week that foreign orders remained "the locomotive of growth in the chemical sector". But with the euro managing to find a firmer footing on world foreign exchange markets, some economic forecasters are concerned that a too rapid acceleration in the common currency could undermine exports this year.

Certainly in November, German export growth was less dynamic than in October with high energy prices combined with the euro's weakness leading to strong gains in imports as the eurozone's economic engine entered the run up to the end of the year. But the weak euro also helped to shore up foreign orders, with exports rising by 15.3 per cent in November on the year.

What is more, with energy prices having slowed strongly as Germany finished the last year economists believe despite signs that economic growth was slipping back a gear that exports continue to grow strongly as the nation entered the new year.

(la/dpa)