Germany’s trade performance was surprisingly weak in July, according to data released today. Exports fell by 1.1% compared with a year ago; analysts expected a small rise.
Sales of goods to the rest of the euro zone were weak, which is no surprise. But a 1% drop in exports to countries outside of the EU is a more worrying result, suggesting that German goods are falling out of favor in faster-growing markets. Coupled with a rise in imports, Germany’s seasonally-adjusted trade surplus fell to €14.5 billion ($19 billion), its lowest level in nearly a year and a half.
With elections just over two weeks away, the timing could hardly be worse for chancellor Angela Merkel. Her CDU/CSU coalition leads in the polls, and the only televised debate between Merkel and her main challenger, Peer Steinbrück of the Social Democrats, was judged a draw on Sept. 2. But the route to forming a government in Germany is far from straightforward, so small shifts in sentiment can have a big impact on the final result.