Data show German exports experienced their highest rise in over six years in August, potentially cooling fears over a slowdown in the world’s third largest export economy.
Germany recorded a 5.4 percent increase in seasonally-adjusted exports in August, according to Federal Statistics Office data released on Monday. The rise exceeded figures forecast by analysts and was the highest monthly rise seen since May 2010.
Imports by the European economic powerhouse also recorded an increase of 3 percent, which reverses the decline recorded in the month before.
In a survey by Reuters, financial analysts had predicted a 2.2 percent rise in exports and 0.7 percent increase in imports.
The improvement in exports helped Germany’s seasonally-adjusted trade surplus to reach €22.2 billion in August. That is an improvement over the €19.4 billion trade surplus reported in July. The performance also exceeded analysts’ forecast of €20 billion.
German exports had weakened in recent months threatening their role as the main driver of the European country’s economic growth. Following the release of the unimpressive July exports data, there were fears that the economy would slow down in the third quarter.
However, the latest figures do not seem to point at any slowdown. Exports are now expected to drive an expansion in the third quarter. The improvement in exports is said to have come as a result of economic expansion in China.
Economic experts cautioned however that world trade still remains weak. A potential “hard” Brexit is considered among the greatest risks that still need to be dealt with.
“This is a welcome amendment. But world trade remains very weak. And there are new risks – for instance that of a hard Brexit,” HSBC Trinkaus’ Thomas Schilbe said, as reported by Business Insider. “The economy in China has stabilized. This is good for producers of capital goods.”
Germany’s total exports to the rest of the European Union in August stood at €54.3 billion, which was a 10 percent boost over the figure for the same month last year. Exports to non-EU countries jumped 9.6 percent from a year ago.
Recent volatility in German export figures has been attributed to the effect of the U.K. referendum. The British market accounts for about 7 percent of exports from Germany.
Data from the leading European market has been reflecting fluctuations since Britons decided in the June referendum that the U.K. should leave the EU. This significantly contributed to low industrial production figures in Germany in July. Industrial production in the country slumped to its lowest level in about two years during the month.
But industrial production rebounded strongly in August, posting its biggest rise since January.
“The light is green for the German economy to thrust into growth in the second half of the year,” Thomas Gitzel, chief economist at VP Bank, said. “The overall growth rate in 2016 could come in better than expected.”
Signs of improvement have made the German government to raise its 2016 growth forecast for the economy to 1.8 percent, up from an earlier 1.7 percent. If that were to be realized, it would be the highest expansion recorded in about five years.