German exports up 3.8 percent in September

German exports up 3.8 percent on month in September, still down sharply on year

• By George Frey, AP Business Writer
• On 8:51 am EST, Monday November 9, 2009

FRANKFURT (AP) -- German exports rose 3.8 percent on the month in September, official data showed Monday, a performance that beat economists' expectations and underlined the improving outlook for Europe's biggest economy.

Still, exports remained 18.8 percent below the levels of a year earlier, the Federal Statistical Office said. Imports rose 5.8 percent on the month, but were down 16.3 percent on the year.

Germany exported goods valued at euro70 billion ($105 billion) in September, while imports were worth euro59.4 billion.

Germany's economy returned to modest growth in the second quarter following a deep recession. Preliminary third-quarter figures are due later this week and are expected to show further growth.

The month-on-month rise in exports, which traditionally have powered Germany's economy, beat economists' forecast of a 2.5 percent increase.

Andreas Rees, an economist at UniCredit in Munich, said it was the biggest monthly export upswing since the end of 2000, and that the coming months also look bright.

Indicators such as the Ifo institute's business confidence index point to a further acceleration in exports in the months ahead, he said.

As for the surge in imports, it "is primarily driven by imports of intermediate goods which will be processed further in Germany," he said.

Meanwhile, retail sales remain weak and imports of consumer goods sluggish, he added, revising downward his estimate of third-quarter economic growth to 0.8 percent from 1 percent.

The government and leading economists currently estimate that the German economy will grow by 1.2 percent next year after shrinking 5 percent in 2009.

Germany's exports to other countries in the European Union totaled euro45.7 billion in September, while imports added up to euro38 billion, the statistical office said. Those figures were down 16.3 percent and 16.5 percent respectively on the year.

Exports to non-EU countries amounted to euro24.3 billion, while imports totaled euro22 billion -- down 23 percent and 16 percent respectively on the year.

Chancellor Angela Merkel's new center-right government aims to stimulate growth through tax relief.

In a first step Monday, her Cabinet approved a series of measures to take effect Jan. 1, including adjustments to corporate tax rules, a cut in the value-added tax rate for hoteliers to 7 percent from 19 percent, and an increase in child benefits.

"Tax policy is growth policy, so the coalition wants to offer fast and effective relief to citizens and companies in the crisis," said Merkel's spokesman, Ulrich Wilhelm. The plan requires parliament's approval.

In a separate report, the Economy Ministry said German industrial production was up 2.7 percent on the month in September, following a 1.8 percent increase the previous month.

Production of so-called investment goods were up 5.9 percent, thanks to an 11.3 percent rise in production of cars and auto parts and a 7.5 percent increase in machinery, the ministry said. Consumer goods production saw a smaller rise of 2.3 percent.

Total third-quarter production was up 3.5 percent from the previous quarter.

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