Germany's trade surplus narrowed in July to its lowest level in 18 months on a stronger-than-expected drop in exports, adding to signs a global slowdown is weighing on Europe's bulwark economy. Imports also fell unexpectedly, data from the Federal Statistics Office showed, suggesting that domestic demand was unlikely to compensate for the weakness in exports.
The report coincided with a meeting of the European Central Bank which is expected to signal a change in policy direction on Thursday, halting an interest rate cycle just five months after it started as the eurozone debt crisis weighs on the economy. Germany's seasonally-adjusted trade surplus narrowed to 10.1 billion euros - its lowest level since January 2010 - from 11.5 billion euros in June. This compared with a forecast in a Reuters poll of 14 economists for 11.2 billion.
"A weakness in global economic growth is impacting German firms despite their high competitiveness," said Commerzbank's Ulrike Rondorf. "Germany can clearly not decouple itself. We expect growth to significantly lose momentum, although a recession should be avoided," she added. Germany's economy has been a star performer in the industrialised world since the end of the 2008 financial crisis and has underpinned growth across the eurozone.
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