Exports boost German economy, but Christmas lockdown adds uncertainty

Germany's economy was given a boost with the latest results from the Federal Statistical Office showing continued recovery, though the nation is bracing for tighter lockdown restrictions after the Christmas period to contain the novel coronavirus that causes COVID-19.

Foreign trade increased by 0.8 percent in October, giving Europe's largest economy a slight lift as it battles to avoid a double dip recession amid moves toward new, more severe, coronavirus containment measures.

"Despite the October slowing, the export sector remains one of the few hopes of the German economy to avoid a significant contraction in the fourth quarter," said ING economist Carsten Brzeski, quoted by Reuters.

"The longer-term outlook, however, remains very mixed, illustrating that the sector will not easily return to its former strength," he added.

Data from earlier in the week showed that the export-oriented manufacturing sector had helped the economy make a steady start to the fourth quarter, despite a partial lockdown in November.

The statistics office Destatis said on Wednesday that exports to China rose by 0.3 percent in October from a year earlier. Exports to the United States fell by 10.5 percent and those to the United Kingdom dropped 11.7 percent.

Reuters noted that the German economy grew by 8.5 percent quarter-on-quarter from July through September. The economy had plunged 9.8 percent in the second quarter amid the first wave of the COVID-19 pandemic.

The outlook for the economy is darkened with expectations of another lockdown after Christmas. Large parts of the services sector were already forced to close from Nov 2.

German Chancellor Angela Merkel has called for tougher measures following a record daily death toll. The Robert Koch Institute, Germany's public disease health authority, on Wednesday announced a record 590 fatalities, bringing the total since the start of the pandemic to 19,932 with more than 1.2 million infections.

Officials in several German states, including Saxony and Bavaria, warned that continued high coronavirus infections could overwhelm hospitals and that too many people were ignoring existing pandemic restrictions.

Merkel aligned with recommendations from Germany's National Academy of Science Leopoldina released on Tuesday that call for an end to school attendance from Dec 14, an extended Christmas school break, a full closure of businesses, and working from home, DW News reported.

Speaking in the Bundestag on Wednesday, Merkel opposed opening hotels over the Christmas and New Year holidays and agreed with recommendations to close shops from Dec 24 until Jan 10.

On criticism of her government's management of the crisis, she argued the country was going through an "exceptional situation".