German Trade Surplus Falls On Imports; Bundesbank Raises Growth Outlook

Germany's trade surplus decreased in April as imports growth exceeded exports, data published by Destatis revealed Friday.

Elsewhere, Bundesbank upgraded its growth projections citing a strong labor market, consumption and government spending and investment.

Exports grew 0.9 percent month-on-month in April, faster than the 0.4 percent increase seen in March and the 0.3 percent rise economists had expected.

However, the growth in imports eased from March, the pace of expansion exceeded the improvement in exports.

Imports gained 1.2 percent in April after rising 2.1 percent in March. Nonetheless, imports were forecast to fall 0.5 percent.

Consequently, the trade surplus fell to a seasonally adjusted EUR 19.8 billion from EUR 19.9 billion in the previous month.

On a yearly basis, exports declined by an unadjusted 2.9 percent, in contrast to March's 10.8 percent increase. At the same time, imports advanced 5.4 percent, but slower than the 14.8 percent rise seen in March.

The current account, which measures the flow of goods, services and investment, showed a surplus of EUR 15.1 billion compared to a EUR 28.1 billion surplus in April 2016.

German data continue to be positive, with a decent rise in exports in April, Jessica Hinds, an economist at Capital Economics, said.

The health of exports supports the assessment that German GDP will expand strongly this year, by about 2.5 percent, the economist added.

Bundesbank upgraded its growth projections for this year, 2018 and 2019 by a percentage point.

The bank forecast the largest euro area economy to grow 1.9 percent this year, 1.7 percent next year and 1.6 percent in 2019.

Bundesbank raised its inflation outlook for this year, while downgrading the projections for 2018 and 2019.

The bank said that the positive outlook is based on a broad, strong upward movement, adding that the supply shortage on the labor market is likely to become increasingly noticeable.

The bank forecast 1.5 percent inflation in the current year, which was revised up from 1.4 percent. The outlook for 2018 was lowered to 1.4 percent from 1.7 percent and the 2019 forecast to 1.8 percent from 1.9 percent.