China is the world's largest exporter.
Yet with the exception of the distortions caused by the timing of the Lunar New
Year holiday, China's exports have been falling on a year-over-year basis each
month this year (save for February). Earlier today it reported exports in
May were 2.5% lower than a year ago.
It does look like Chinese exports are
bottoming out. Export volumes appear to have risen in May, but
competitive price cuts lowered the value of its foreign shipments.
Germany is the world's second largest
exporter. It reported April trade data earlier today. In the
first four months of the year, its exports are up 5.9%. They rose 1.9% in
April on a seasonally adjusted basis, which is the largest monthly increase of
the year.
Exports to fellow eurozone members are subdued
but still positive. They are up 3.1% year-to-date at 145.1 bln
euros. German exports to other (non-EMU) EU countries are up 7.1% to 84.2
bln euros. Exports to other countries are up 7.9% to 164.4 bln
euros. The difference in performance is likely a function of two factors;
growth differentials and currency impact, and we would tend to put more weight
on the latter.
Eurozone growth in Q1 was stronger than
expected. France, the largest economy in EMU after Germany, expanded
by 0.6%, its strongest quarterly performance in Q2 2013. Italy, the
region's third largest economy grew by 0.3% in Q1. That is the strongest
since Q1 2011. It has now experienced two consecutive quarters of growth since
H1 2011. Spain is the EMU's fourth largest economy, and it has
continued to accelerate. Its 0.9% quarterly expansion in the
January-March period is the strongest performance since Q4 07.
The euro finished this past April near
$1.1225. This represents a 19% depreciation from the end of April
2014. The euro may still be too strong for some in Europe, but it
contributes to the hyper-competitiveness of the German economy.
On the other side of the balance are imports.
German imports are up 2.1% year-to date at 313.1 bln euros from the first four
months last year. Imports from fellow EMU members lagged and are up 1.1%
over the same period (to 140.7 bln euros). Imports from the eurozone
increased in April year-over-year, which means that national growth of eurozone
members did not benefit in Q1 from exports to Germany.
German imports from other EU countries rose 1.4%
year-to-date (to 63.2 bln euros). In April, they fell 0.8% from a
year ago. Just like German exports to non-EU countries was stronger than
to EU countries, so too are imports. German imports from non-EU countries
are up 3.7% year-to-date to 109.2 bln. They were up 5.1% in April
year-over year.
Germany major trading partners outside of
Europe, include China, the US, Russia and Vietnam. Although bilateral
trade figures trade figures are not yet available, given the sanctions, we
assume that if anything German exports to Russia have fallen. On the
other hand, we are also under the impression that some German producers
have production facilities in Russia rather.
The large German trade surplus is a cause of
some consternation. The EU has been critical of it. Individual
countries within EMU have been critical. Earlier today from the G7
meeting, Italy's Prime Minister Renzi noted that the German trade "surplus
is an issue." In its semi-annual report on the foreign exchange
market and the international economy, the US Treasury has been
critical. The US argues that the much fiscal consolidation in the
much of EMU is not being offset by more stimulative policies by the surplus
countries, like Germany.
Germany resists the international pressure.
It argues that the ECB's unorthodox monetary policy measures, which are driving
the euro lower, are being implemented over its objections. It also argues
that German is an aging population. Its demographic dynamics appear to be
deteriorating faster than in Japan. It surplus savings (current
account surplus) needs to be understood within the rubric of the life-saving
cycle. However, its ultimate defense is that the German surplus is
a distraction. A smaller German surplus is not a substitute for the structural
reforms that are so desperately needed.
The German Juggernaut: A Closer Look at April Trade Figures
Reviewed by Marc Chandler
on
June 08, 2015
Rating:
Reviewed by Marc Chandler
on
June 08, 2015
Rating:
