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Is Germany 'losing steam'?

Jaimie Kanwar

The German economy could be under threat from two of its closest allies, argues one expert…

This is the view of Andreas Rees, an economist at Unicredit, who was commenting on the news that Strong export growth has helped Germany boost its trade surplus. 

Despite Germany’s surplus rising to an above-forecast 18.7bn euros ($27.6bn; £14.1bn) in April, Mr Rees was cautions: "Data on exports is looking good, but in coming months, exports will lose steam significantly, and the main weakness will come from the eurozone and Britain."

Despite the strong euro, the total value of exports was 14% higher than April 2007 and 1.2% higher than March. But experts said slowing growth across Europe would inevitably hit trade.

Economy set to struggle?

As one of the world's largest exporters, Germany's growth prospects are particularly attuned to the economic health of key trading partners in Europe, North America and Asia.

The strong euro, which has appreciated strongly against the dollar in the past year, has made life more difficult for exporters. But trade with fast-growing economies in Eastern Europe, the Middle East and Asia continues to hold up well.

With recent figures showing a decline in both industrial production and orders last month, economists believe the economy will struggle even to see modest growth in the second quarter of the year.

Mr Rees concluded: "The picture of the economic situation has not changed with the latest figures. We are maintaining our estimate that we will not see growth in the second quarter."