German industrial production rises, but exports fall

By Maria Martinez

BERLIN (Reuters) -German industrial output rose in January but exports plunged, showing the challenges facing the incoming government in reviving the euro zone’s largest economy in a time of geopolitical uncertainty.

German exports fell by 2.5% in January compared with the previous month, data from the federal statistics office showed on Monday. The result compared with a forecast 0.5% increase in a Reuters poll.

Imports rose by 1.2% in January compared with the previous month, the data showed.

Germany was last year the only G7 country to post a contraction for two consecutive years. The parties hoping to form Germany’s next government agreed last week to overhaul state borrowing rules to boost defence spending and earmarked 500 billion euros ($541 billion) for infrastructure investments over 10 years.

Their efforts to boost the economy come as a trade war with the U.S. looms, with President Donald Trump threatening tariffs on the European Union.

The foreign trade balance showed a surplus of 16.0 billion euros in January, down from 20.7 billion euros in December 2024, and down from 25.3 billion euros in January 2024.

Exports to EU countries dropped by 4.2% on the month, while exports to countries outside the EU decreased by 0.4%.

Most German exports went to the U.S. in January, although exports were down 4.2% compared with December 2024.

"This still paints a rather unflattering picture of a nation known as an industrial powerhouse," Carsten Brzeski, global head of macro at ING, said.

INDUSTRY BOTTOMING OUT