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Carsten Brzeski, Chief Economist at ING, notes that in August, German exports fell by 0.1% month-on-month, from -0.9% in July as imports dropped by 2.7% MoM, the trade balance widened to €17.2 billion, from €16.5 billion.

Key Quotes

“Sluggish trade data over the summer months, was in our view not so much the result of ongoing trade tensions but rather driven by a general weakening of global manufacturing activity and a temporary blip in German domestic demand. At the same time, the weak euro exchange rate should still (partly) be offsetting these adverse effects.”

“Looking at the bigger picture, the ongoing trade tensions have not led to any structural changes in the German export sector. Exports to most main trading partners have remained broadly unchanged since the start of the year.”

“The traditional German growth engine is stuttering once again. Industrial production and exports have lost some of their momentum in the course of 2018 but reduced momentum from a high level is still no reason to worry. Luckily, the German economy is no longer running on one or two cylinders but still has solid domestic demand to lean on. At least for now.”