German exports unexpectedly soar in January

Frankfurt, Germany: German exports jumped more than expected in January, official data showed Wednesday, thanks to a rebound in demand from EU countries and key market China.

Exports totalled 135.6 billion euros ($147 billion), a 6.3-percent increase on the previous month when shipments fell sharply, federal statistics agency Destatis said.

Analysts surveyed by Factset had expected a smaller increase of 1.5 percent.

The spike marked a rare spot of good news for Europe's largest economy which shrank last year after being battered by headwinds including high interest rates, fragile global trade and a manufacturing slump.

Imports to Germany meanwhile rose by 3.6 percent to 108 billion euros in January, widening the trade surplus to 27.5 billion euros.

The export bounce was driven by an 8.9-percent rise in shipments to fellow European Union countries, Destatis said, while those to China climbed by 7.8 percent.

The United States remained the most popular destination for "made in Germany" goods but demand fell by 1.7 percent month-on-month.

"Despite all the swan songs, Germany's foreign trade is off to a strong start in 2024," said Deutsche Bank economist Robin Winkler.

The stronger-than-expected rise in exports to China especially brought "a ray of hope" to the ailing German economy, Winkler added.

The German economy contracted by 0.3 percent last year but is expected to stage a modest recovery in 2024 as inflation eases and demand picks up.

Germany's IfW Kiel economic institute said in updated forecasts on Wednesday that it now saw output increasing by just 0.1 percent this year, down from an earlier projection of 0.9 percent growth.

"Although the German economy is regaining momentum over the course of the year, the overall dynamism remains weak," said Stefan Kooths, the IfW's head of economic research.

The Ifo institute likewise downgraded its forecast to 0.2 percent growth in 2024, down from 0.7 percent previously.