FRANKFURT (AFP) – The economic skies above the eurozone darkened again on Thursday as data showed a sharp drop in exports from its two biggest economies, Germany and France.
German exports contracted by a massive 5.8 per cent in August – the steepest drop since January 2009 – causing the trade surplus to shrink to 17.5 billion euros.
In neighbouring France, exports dropped by 1.3 per cent, pushing the trade deficit up to 5.8 billion euros, the highest figure since January.
France’s big trade deficit is worsening with the United States and with Asia, notably because of a decline in Airbus deliveries.
The German statistics office Destatis explained that the late timing of the summer holidays — in August instead of in July – had weighed on economic activity.
German factory orders and industrial output had already fallen in August for the same reason. However, analysts have so far insisted that the weakness will be short-lived.
But the disappointing export data could now suggest that the fallout from the Ukraine crisis is proving more severe than initially anticipated.
The data showed that exports to the EU rose by 2.0 per cent, with eurozone exports edging up by just 0.2 per cent. Exports to countries outside Europe, however, slumped by 4.7 per cent.
“The German economy has experienced an extremely sharp stand-still in August. Industrial production, new orders and exports were down. And the magnitude of the fall brings back memories of the peak of the financial crisis in early 2009,” said ING DiBa economist Carsten Brzeski.
The development was not easy to explain, he said.
“Of course, the cooling of many export destinations combined with increased uncertainty stemming from the Ukrainian crisis look like the main drivers of the slowdown but in our view fall short explaining the entire story,” he said.
“Looking ahead … the economy seems to need a small miracle in September to avoid a recession in the third quarter,” he warned.
The German economy contracted by 0.2 per cent in the second quarter and a renewed drop in the third quarter would technically put the country in recession.
Berenberg Bank economist Christian Schulz said “evidence of a German slowdown is more prevalent in imports, which fell for a second successive month and are heading for a 0.6-per-cent decline in the third quarter.”