German outlook worsens as exports plunge

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German exports and imports have sunk the most since 2009, according to the latest data released by the Federal Statistics Office Destatis, a further indication that the largest economy in the eurozone is losing steam.

Seasonally adjusted exports declined to -5.8% in August, compared to export growth of 4.8% the previous month while seasonally adjusted imports declined by -1.3% compared to -1.4% in July.

While the German trade balance is still positive, the seasonally adjusted trade surplus is now at €17.5bn.

The weakened results come as a number of well known research institutions have downgraded their growth forecast for the coming year to 1.2%, due to a decline of domestic and international demand combined with a deteriorating investment climate. They also forecasts a slight increase in unemployment, from 6.7 to 6.8% by 2015.

The think tanks criticise the German government for insufficiently funding state-le investments, which in turn leads to pessimism among private investors and  advocate a reduction of tax burdens.

The research institutions include the German and Austrian Institute for Economic Research DIW, the Halle Institute for Economic Research, the ifo Institute as well as the Rhineland Palate Institue for Economic Research RWI.

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