* Exports rise meagre 0.3 pct after 2.4 pct decline in prior
* Trade surplus narrows to 15.2 bln euros, lowest since
* German economy expected to contract in fourth quarter
* French cbank sees GDP dipping 0.1 pct in Q4
By Noah Barkin
BERLIN, Dec 10 Germany's trade surplus narrowed
in October to its lowest level in over half a year as exports
posted meagre growth in the face of weakening demand from the
country's recession-hit European partners.
The figures added to evidence that Europe's largest economy
will contract in the fourth quarter of the year amid a slowdown
in foreign sales, long a driver of German growth.
Imports rose 2.5 percent in October, far stronger than a 0.3
percent increase in exports that followed a 2.4 percent decline
in September, data from the Federal Statistics Office showed.
"The outlook may now be slowly improving with positive
signals for Chinese and American growth, but the euro zone
recession is likely to continue to weigh on German exports,"
Christian Schulz of Berenberg Bank said in a research note. "A
falling trade surplus may also weaken GDP growth in Q4 further."
Germany has been an engine of growth throughout the
three-year euro crisis, but weakness elsewhere in the European
Union, where it sells roughly 60 percent of its exported goods,
is starting to bite.
Last week, Germany's central bank slashed its growth outlook
for next year, forecasting a meagre expansion of 0.4 percent
compared to 1.6 percent previously.
The downbeat mood was echoed on Monday in the euro zone's
second largest economy. The Bank of France said it expected GDP
to dip 0.1 percent in the final quarter from the third, while
industrial output unexpectedly shrank in October.
For Germany too many economists expect an economic
contraction in the October-December period, and some see the
country entering a technical recession in early 2013 with a
second consecutive quarter of falling gross domestic product
"Given the difficult economic situation in some euro-area
countries and widespread uncertainty, economic growth will be
lower than previously assumed," the Bundesbank said on Friday.
It made clear however, that it did not expect a protracted
Exports were still stronger in October than many economists
had expected. In a Reuters poll they had forecast a 0.5 percent
decline, while imports had been expected to push up by a more
modest 0.3 percent.
The seasonally-adjusted trade surplus shrank to 15.2 billion
euros from 16.9 billion in September. It was the lowest level
since March, and well below a consensus forecast for it to
narrow to 16.1 billion euros.
Unadjusted data showed German exports to euro zone countries
declined 1.2 percent in the January-October period, compared to
the prior year.
Recent data from Germany has been mixed, with industrial
output slumping 2.6 percent in October, but manufacturing orders
surging 3.9 percent in the same month due to strong demand from
outside the euro zone.
The Munich-based Ifo institute's measure of business
sentiment, the most closely-watched leading indicator for the
German economy, rose in November for the first time in seven
months, buoyed by hopes for strong exports outside the euro zone
and robust Christmas sales.
Thomas Hessler, an economist at HSBC Trinkaus, said however
that the trade data pointed to a "proper" contraction in fourth
quarter contraction GDP, in the region of 0.3 percent.