German Trade Surplus Increases Sharply
The total trade surplus (the current account surplus minus net factor income and net factor income, or alternatively the trade balance in goods plus the trade balance in services and "supplementary trade items") increased even more, from €27.9 billion to €40.4 billion. This implies that foreign trade gave a net contribution to German GDP growth in the first quarter of 2.1%:points. The VAT increase is likely to have reduced consumption significantly, so GDP growth will still likely be lower than the 3.7% it reached during the fourth quarter. But the slowdown will probably not be as dramatic as previously thought.