German trade surplus shrinks

Germany's trade surplus narrowed by more than expected in July as high oil prices fuelled a sharp rise in imports which outweighed a modest gain in exports, Federal Statistics Office data showed on Thursday.
In seasonally adjusted terms, the trade surplus shrank to 13.0 billion euros from a downwardly revised 14.6 billion in June. Economists polled by Reuters last week had forecast the surplus would narrow to 14 billion euros.
Exports rose on the month by 0.5 percent to 64.7 billion euros, but imports jumped 3.7 percent to 51.7 billion euros, the third rise of more than three percent in the past four months. "(The fact) that imports grew more strongly than exports is down to higher oil prices," said SEB economist Klaus Schruefer.
Oil prices hit a record high of over $62 per barrel in July and stayed close to $60 thereafter. In August they breached $70 for the first time but have eased in recent days after international moves to ease bottlenecks in supply.
The monthly gain in exports was only half the amount predicted by the Reuters poll. But Commerzbank economist Matthias Rubisch said trade remained a key growth driver. "We don't think that high oil prices are going to have that big an impact on exports because investment goods account for a large proportion of German export goods, and these are increasingly in demand from oil producing countries," he said. Separately, Germany's BGA exporters' association said on Thursday it was relaxed about high oil prices, leaving unchanged its forecast for six percent export growth this year.
It said Asian demand for German energy saving equipment was booming and that oil producing nations were snapping up capital goods. However, it cut its 2005 German growth forecast to 0.7 percent from one percent, blaming the weak domestic economy.
"Whether we are export world champions or not, we have to win our home game against growing import competition," BGA President Anton Boerner told a news conference.
From a year earlier, exports were up 3.2 percent in unadjusted terms, with imports rising 2.9 percent. Over the first seven months of 2005, exports rose 5.5 percent on the year, while imports were up 6.6 percent.
A breakdown of this data showed exports to other eurozone countries rose 7.1 percent over the period, and to non-European Union nations by 4.5 percent. Imports from the EU as a whole rose six percent, and by 7.8 percent from the rest of the world.