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Germany's KfW External Trade Barometer hit 100 points in the second quarter of 2016. However a subdued external environment is likely to cause the indicator to settle down at 99.8 points from the third quarter of 2016, below the average trend.
Overseas demand is dented by the fallout from the Brexit referendum as well as Turkey's failed coup attempt. Turkey is a moderately sized market for Germany in terms of total volume but relatively important for the engineering and automotive industries. Bulk of German exports goes to other EU countries and as things stand, both events add up to the weakness.
Accordingly, the momentum of the recovery will presumably remain below average until the middle of next year. Businesses are displaying some degree of uncertainty and therefore have less optimistic business expectations as a result of the less favourable external environment, so imports will lose momentum in the forecast period.
"This sub-indicator will be slightly below its long-term average at the end of the forecast period, at 99.7points. In the next quarters, exports will therefore grow more slowly than imports, which will weigh on economic performance." - KfW Research.
