GERMAN DATA: Q1 Trade Surplus Opens Up Possibility For GDP Revision

The German trade surplus increased in March to E21.1bln (seasonally-adjusted, vs E19.1bln cons; E18.0bln prior, revised from E17.7bln). This was driven by a 1.4% M/M decline in imports (0.4% cons; 0.5% prior, revised from 0.7%) and a 1.1% in exports (1.0% cons; 1.8% prior, revised from 1.9%). On a 3m/3m comparison, that means that the trade surplus increased 2.6% (-3.4% Q4) - that is notable since net exports were not flagged as a positive driver by Destatis in their Q1 flash GDP commentary, opening up at least the possibility for a positive revision on these grounds.

In nominal terms, a trade surplus of E20bln/month is close to levels seen for years pre-pandemic. In real terms, as a % of nominal GDP on a 12-month rolling basis, the series stands at 5.3% as of March, 0.6pp below levels seen around a year ago (vs 8.0% 2015 high, 2.1% 2022 low).

• Across countries, an export jump to both the US and China stands out (see bottom right chart) - we would not be surprised to see these reverse over time (German exports to China are on a longer-term downtrend which appears fundamentally based according to policy reports, see here and here; for detailed commentary on the US part see our earlier comment on March IP).
• Given that, the outlook for German exports does not look particularly bright overall. IFO export expectations dropped in April, to -9.8 (-2.3 March), the lowest since May 2020 in an unsurprising move following firmer US tariff policy. However, on a historical comparison, the index remains well off lows seen during the pandemic and the global financial crisis.