Imports Deterioration Further Sign of Subdued Demand

The German trade surplus for December came in at +E22.2bln (seasonally-adjusted; vs E19.0bln cons; E20.8bln prior, revised from E20.4bln) according to data published on Monday. This was the biggest monthly surplus since November 2017. The widening of the surplus was driven by imports declining even faster than exports, with imports at -6.7% M/M (sa; vs -1.9% cons; +1.5% prior, revised from +1.9%) and exports at -4.6%% M/M (sa; vs -2.8% cons; +3.5% prior, revised from +3.7%).

• For 2023 in total, nominal imports to Germany fell by -9.7% Y/Y. Exports fell -1.4% Y/Y in the same period. The value of imports in December was the lowest since September 2021, and the value of exports was the lowest since March 2022.
• Looking at a geographical split, trade declined faster in December with other EU-members than with third party countries; import declines from other EU-members and from third party states were -7.4% M/M (vs +2.4% M/M) and -5.9% M/M (vs +1.5% prior), respectively; exports declined -5.5% M/M (vs +5.2% M/M) to other EU states and -3.5% M/M (vs +0.4% prior) to third party countries.
• Exports to the US - which continues to be the largest single buyer of German exports (E12.6bln) - decreased by -5.5% M/M in December (vs -2.3% prior). The biggest single source of imports is China (E11.6bln); their value declined -8.5% M/M (vs +1.2% prior). Chinese imports to Germany are now -35% lower than at their all-time high in April 2022.
• Also in real terms, the trade balance widened in December, driven by strongly declining imports (see below). Recent disruptions in the red see might have had a stronger impact on German imports than exports (as per them being more Asia-centric then exports).
• Nonetheless, the impact on Q4 GDP may have been positive from a national accounts perspective, but is perhaps more indicative of ongoing weak demand in the German economy - December retail sales for example were weak.

MNI, Destatis, Bundesbank