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Economy

German economic growth slows despite strong exports

German exports in October rose by twice the expected 1.5 percent. Yet despite booming export rates, the country's economic growth appears to be headed for a setback.

Cog wheels in a factory

German figures are sending contradictory signals

German exports have reached their highest level in more than two years. According to figures released by the Federal Statistics Office on Monday, sales abroad rose by three percent to 84.3 billion euros ($117.4 billion).

"The exports sector remains the driving force behind the country's economic recovery," said Anton Boerner, president of the Federation of German Wholesale, Foreign Trade and Services.

Powered by demand from emerging economies like China, the increase in exports was twice the expected 1.5 percent rise predicted by analysts.

Industrial output drops

Anton Boerner

Boerner says exports remain the driving force behind Germany's economic recovery

But the new data came as industrial output slumped, with both industrial production and factory orders falling short of expectations.

Instead of a predicted 0.5 percent increase, industrial output in October dropped by 0.8 percent compared to the previous month.

Despite releasing disappointing figures, the Economics Ministry in Berlin insisted that Germany's economic recovery was not in danger.

Berlin insists overall trend is positive

"Industrial production is still trending upwards. In the third quarter, output could again rise above the level of the second quarter, when we saw strong growth," the ministry said in a statement.

In September, Berlin had raised its 2010 growth forecast to 3.4 percent, following a crippling contraction of 4.7 percent in 2009.

At the same time, unemployment dropped to 7.5 percent in the seasonally adjusted term. The number of total unemployed dropped to below 3 million for the first time in two decades.

Author: Andreas Illmer (Reuters, dpa)
Editor: Matt Zuvela

DW.DE