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Tuesday, 13 December 2011

Germany and The Netherlands report a drop in month-on-month exports for October 2011. Both countries are extremely tightly connected when it comes to exports and show a structural trade surplus.

Germany and The Netherlands both presented their export figures on October 2011. Although the results showed strong improvement year-on-year, there was a worrisome month-on-month drop for both countries.

This makes sense as both countries are among the largest net exporters of the European Union and both countries do much business with the peripheral Euro-countries (PIIGS;Portugal, Italy, Ireland, Greece and Spain) that suffer most from the credit crisis. This is yet another alarm bell that shows that the strong Euro-countries The Netherlands and Germany are both gliding into a recession. As a matter of fact, The Netherlands is now also officially in a recession.

Here are the reports from the German ( and Dutch ( statistics bureaus:


Germany exported commodities to the value of Euro 89.2 billion and imported commodities to the value of Euro 77.6 billion in October 2011. As further reported by the Federal Statistical Office (Destatis) on the basis of provisional data, German exports increased by 3.8% and imports by 8.6% in October 2011 on October 2010. Upon calendar and seasonal adjustment, exports decreased by 3.6% and imports by 1.0% compared with September 2011.

The foreign trade balance showed a surplus of Euro 11.6 billion in October 2011. In October 2010, the surplus amounted to Euro 14.5 billion. In calendar and seasonally adjusted terms, the foreign trade balance recorded a surplus of Euro 12.6 billion in October 2011.

According to provisional results of the Deutsche Bundesbank, the current account of the balance of payments showed a surplus of Euro 10.3 billion in October 2011, which included the balance of services (– Euro 0.5 billion), factor income net (+ Euro 4.5 billion), current transfers (– Euro 3.6 billion), and supplementary trade items (– Euro 1.7 billion). In October 2010, the German current account showed a surplus of Euro 14.2 billion.

In October 2011, Germany dispatched commodities to the value of Euro 52.4 billion to the Member States of the European Union (EU), while it received commodities to the value of Euro 49.2 billion from those countries. Compared with October 2010, dispatches to the EU countries increased by 0.8% and arrivals from those countries by 7.3%. Commodities to the value of Euro 34.8 billion (–0.4%) were dispatched to the Euro area countries in October 2011, while the value of the commodities received from those countries was Euro 33.8 billion (+6.1%). In October 2011, commodities to the value of Euro 17.7 billion (+3.1%) were dispatched to EU countries not belonging to the Euro area, while the value of the commodities which arrived from those countries was Euro 15.4 billion (+10.2%).

Exports of commodities to countries outside the European Union (third countries) amounted to Euro 36.8 billion in October 2011, while imports from those countries totalled Euro 28.5 billion. Compared with October 2010, exports to third countries increased by 8.3% and imports from those countries by 10.9%.`

The Netherlands

The volume of exports of goods was nearly 2% smaller in October than twelve months previously. It is the first decrease in exports in nearly two years. In September, growth already stagnated. The volume of imports was nearly 3% down on October 2010. Volume figures have been adjusted for the number of working days.

According to December’s Exports Radar, circumstances for Dutch exports have worsened. Export conditions have deteriorated for more than six months now.

The value of exported goods totalled 33.6 billion euro, i.e. more than 2% more than one year previously. The value of imports grew by nearly 3% to 30.2 billion euro, resulting in a 3.4 billion euro trade surplus, which is equal to the October 2010 level.
The value of imports and exports of raw materials and mineral fuels grew substantially compared to October 2010. Higher oil prices played an important part in this respect.
Trade with EU countries was more dynamic than trade with non-EU countries. The value of exports to non-EU countries was in fact below the level of one year previously.
Export and import prices were respectively 4.2 and 5.2% up on twelve months previously. As a result, terms of trade deteriorated compared to October 2010.

Exports of goods (volume adjusted for working days)

Export of Goods in The Netherlands
Click to enlarge
Where the German exports until October showed growing figures, the Dutch export has already been declining for a longer time. This might have to do with the fact that Germany exports more durable goods like cars, industrial hardware and expensive household appliances, where The Netherlands exports more agricultural produce and consumption goods. The latter are probably easier to replace by domestic goods and produce.

In both countries the imports in October increased compared to exports. As the Dutch Central Bureau of Statistics already stated: the increased imports are probably caused by the rising prices for commodities, like oil and raw materials. However, there is still a substantial surplus on the trade balance, respectively €12.6 and €3.4 for Germany and The Netherlands.

This export surplus is one of the reasons that the problems in South-Europe remain; where the Netherlands and Germany are net exporters, the PIIGS are all (except for Ireland) net importers of mainly German, Dutch and French products. What became clear on last Thursday´s EU meeting, was the total lack of will with both chancellor Angela Merkel and PM Mark Rutte of The Netherlands to do something about this structural problem. Both rather play the ´blame game´ towards the PIIGS and assume the ostrich position where it comes to the trade surplus.

Especially when you collect the export data over a longer period of time (see the following chart), you discover the extreme interconnectedness of both economies. Both countries have already been each other’s biggest trade partner for a long time and followed each other very closely in almost all economic, financial and monetary decisions in the pre-Euro age. This was the reason that the Dutch Guilder and the Deutschmark were locked together since the seventies.

German and Dutch exports and imports 2002-2011 in € mln.
Sources: and
Click to enlarg
This interconnectedness is so strong that you could consider The Netherlands almost as another German state. Even when the populist politicians and the anti-Euro doomsday clowns are right and the Euro would fall apart, the tandem Germany – The Netherlands would stick together like two magnets and would probably form a new currency union.
But I don´t expect this scenario to become true at all.

However, I agree with Minyanville´s Todd Harrisson ( that the leaders that go into a crisis are seldom the leaders that come out of a crisis. The disappointingly weak and selfish leaders of Germany and The Netherlands will without a doubt be replaced for more powerful and decisive leaders. When this will happen, I don´t know, but it´s just a matter of time.

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