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Germany has reported a sharp decline on both of its imports and exports during the month of June, with the decline of imports leading the country’s surplus towards growth.

Even though analysts were not extremely concerned over the sluggish growth of the country’s exports and imports, there is a lingering possibility that the figures could escalate criticism that Germany is knocking the global economy off balance by operating such a huge trade surplus.

The German government expects the economy to rise by 1.5 percent this year, lowering its forecast of 1.9 percent in 2016.

Figures

According to the Federal Statistical Office data presented on Tuesday, seasonally adjusted exports edged lower for the first time this year by 2.8 percent, its biggest monthly drop since August 2015, ending a five-month streak of gains.

Imports slipped 4.5 percent in June, making it its largest fall since January 2009, when the global economy was moving on a downward trend.

The latest figures failed to meet analysts’ expectations as they estimated exports to go down by 0.3 percent, and imports to move up by 0.2 percent.

Germany’s seasonally adjusted trade surplus in June rose to €21.2 billion ($25 billion), adding 4.2 percent to last month’s €20.3 billion, and hitting its highest level since August 2016. However, it was still slightly lower than economists’ forecast of €21.4 billion.

On a year-to-year basis, exports were 0.7 percent higher than the previous year, while imports grew 3.6 percent.  Exports to the EU countries also lifted 2.4 percent, while non-EU countries lost 1.7 percent.

Imports from EU countries added 1.7 percent, and so do with non-EU nations as they gain as much as 7.5 percent.

In unadjusted terms, Germany’s wider current account surplus, an indicator of the flow of goods, services, and investments, increased to €23.6 billion after a downward change of €16 billion in May. Germany’s balance in June of last year stood at €24 billion.

A One-off Event

Economists were not that worried on the weak June figures as they believed it was only a technical adjustment after five months of gains due to robust demands for German products from within and outside the euro zone.

Folker Hellmeyer called the figures as one-off event, which would be adjusted through growth in the coming months, noting that global trade is building up momentum that will bring an upbeat result on German exports.

He also said that the increase in orders and inventories proved that the country’s economy is in good condition.   

German industrial orders raised twice as much as expected in June as a result of strong domestic demand, with factories posting a 1 percent boost in contract, beating growth forecast of 0.5 percent.

Production in the industrial sector unexpectedly declined by 1.1 percent for the first time this year, but analysts said that it does not suggests that the momentum of development is waning.

UniCredit’s analyst Andreas Rees said that the upward trend remains steady, and Germany should use the world’s continuous economic recovery to its advantage as it would strongly benefit from it in the second half of the year, even if the euro zone recuperation slows down.

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