Connect to share and comment

German exporters cut prices on the year for first time since 2009

PlacardEnlarge
(GlobalPost/GlobalPost)

BERLIN (Reuters) - German exporters slashed their prices year-on-year in April for the first time since 2009 as an economic slowdown and the euro zone crisis weighed on demand for high-quality German goods.

Export prices fell by 0.4 percent in April compared with the same period a year earlier - the first time exporters have cut their prices on the year since December 2009 at the height of the financial crisis.

"There's a lot of competition in Europe at the moment so you have to make cuts to stay in business," said Ilja Nothnagel, foreign trade specialist at Germany's DIHK Chambers of Commerce.

"It hurts but it's better than not doing any business at all," she said.

The flash purchasing managers' survey for May has shown German manufacturers lowered their output prices further in May due to weak demand, though input prices fell even more sharply.

Many euro zone countries, including France - Germany's most important export customer - are in recession and even China, which had proved a strong alternative market for German shipments during the early years of the euro zone's troubles, is now facing a slowdown.

The DIHK expects exports to grow by just 2.0 percent this year, down from growth of 3.7 percent last year and well below the increase of 7.8 percent recorded in 2011.

But Nothnagel said a slowdown in the global economy meant German exporters could purchase advance services more cheaply, easing the pain somewhat.

Import prices fell by 3.2 percent on the year in April in their biggest drop since November 2009. That reduces costs noticeably given that German exports are made up of more than 40 percent of previously imported parts.

The fall in import prices was largely driven by a 11.7 percent drop in the cost of imported energy compared with April 2012 as global market prices fall on the back of weak demand.

(Reporting by Rene Wagner; Writing by Michelle Martin. Editing by Jeremy Gaunt.)

http://www.globalpost.com/dispatch/news/thomson-reuters/130528/german-exporters-cut-prices-the-year-first-time-2009