February 12, 2013 / 12:40 PM / in 5 years

UPDATE 2-German firms optimistic on exports despite strong euro

BERLIN, Feb 12 (Reuters) - A German business group played down worries that a strong euro is hurting the country’s exports, saying on Tuesday that firms are modestly more upbeat about selling abroad than they were last autumn.

“The economy is picking up at the beginning of 2013,” the German Chambers of Industry and Commerce (DIHK) said, adding that its survey of around 28,000 companies suggested worries about the euro debt crisis were lifting.

“After continually worsening over the course of 2012, the business situation of firms is stabilising at what is still a high level. The interim crisis mood has calmed.”

Germany has rebuffed pressure from France for a medium-term target for the euro’s value as central banks in other countries, particularly Japan, print money to prop up their economies.

Alexander Schumann, DIHK’s chief economist, told a news conference: “We see no direct dangers for German exports for the time being.”

He noted that the euro zone still accounted for around 40 percent of German shipments abroad and said a stronger euro also helps German firms by making imports of energy and raw materials cheaper.

Even so, a greater euro appreciation could hurt Germany by snuffing out tentative signs of recovery in the weaker euro zone countries, Schumann added.

Group of Seven nations reiterated their commitment on Tuesday to market-determined exchange rates and said fiscal and monetary policies must not be directed at devaluing currencies.


The DIKH survey, taken between mid-December and mid-January, tallies with the influential Ifo index, which has risen for the last three months and in January showed morale among German businesses rising to its highest in more than half a year.

The mood among intermediate and capital goods producers worsened as investment activity at home and abroad suffered, the DIHK said, but private consumption at home was fairly robust.

The DIHK said companies were becoming less sceptical about the months ahead, especially due to some success in dealing with the euro zone crisis. But more than half of firms expected setbacks in domestic demand as well as additional burdens in the form of higher energy and raw material prices.

The DIHK said a decline in investments had stopped: “Gradual improvements in the euro zone stabilise the planning horizon for companies across all industries.”

Lower investment levels likely contributed to a 0.5 percent contraction in the German economy in the fourth quarter. Most economists nonetheless see Europe’s economic powerhouse avoiding a recession, defined as two consecutive quarters of contraction, by growing moderately in the first quarter.

The DIHK said German companies still planned to take on new workers but there would be no big hiring spree while the euro debt lingers.

Data released this month has shown a slight upturn in the German economy, with modest increases in exports, industrial orders and output while sentiment surveys have improved, the private sector has expanded and unemployment has fallen.

The DIHK said 29 percent of participants in the survey were from industry, another 24 percent from commerce, a further 41 percent from services and the remaining 6 percent from construction.

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