FRANKFURT, Feb 8: Germany looks set to retain its title as ‘champion exporter’ of the world for 2005, after exports topped another record last year, data showed on Wednesday.

However, the resilience of German exports belies the ongoing sluggishness of domestic demand, which remains the main hurdle to a self-sustaining recovery of the eurozone’s biggest economy, analysts here said.

Germany, which was already the world’s leading exporter in 2003 and 2004, exported goods worth a record 786.1 billion euros (942 billion dollars), a rise of 7.5 per cent from a year earlier, the federal statistics office, Destatis, calculated.

The value of imports also increased strongly, primarily as a result of the high price of oil, rising by 8.7 per cent to 625.6 billion euros, the office said.

That meant that Germany’s trade surplus — the balance between imports and exports —expanded by 2.8 per cent to 160.5 billion euros, the highest level since the collation of foreign trade data began following the end of World War II.

Taking into account trade in services and income, Germany’s current account showed a surplus of 90.4 billion euros in 2005, up from 84.5bn euros in 2004.

The European Union remained the biggest customer for German-made goods, accounting for exports of 498.5 billion euros, or 63 per cent of the total.

For its part, the 12-country eurozone accounted for exports of 339.8 billion euros or 43 per cent of total exports.

While the World Trade Organisation has yet to publish its annual country export rankings for 2005, the new data suggest that Germany could once again be ahead of the United States and the fast-growing Chinese economy as the world’s biggest exporter of goods.

“Germany is likely to be the champion exporter again in 2005,” said Destatis spokesman Dirk Mohr. By comparison, China exported goods worth a total 637bn euros last year and its trade surplus was just half of the German figure.

The German government is confident that export growth will remain robust again this year.

Economy Minister Michael Glos recently predicted a rise of 6.5 per cent in exports in 2006 “in view of the favourable global economic environment.”

Demand for high-quality manufacturing goods “made in Germany” remains high, said the Cologne-based economic think tank IW.

In particular, the dense network of small and medium-sized companies in Germany was highly successful in areas such as machine-tools, very much in demand in fast-growing economies such as China.

By contrast, France, where the capital goods sector is not as strong, exported goods worth just 355 billion euros last year and looks set to have run up a record trade deficit in 2005.

However, the strength of German exports is very much a two-edged sword and means that the eurozone’s biggest economy is simply hitching a ride on the coattails of the global economy rather than growing under its own steam, observers say.

Exports accounted for three quarters of the meagre 0.9 per cent growth notched up by the German economy last year.

And even if domestic demand is finally showing signs of picking up, it is still far from robust, particularly in view of the chronically high level of unemployment in Germany.

A total five million people were out of work in the eurozone’s biggest economy in January, equivalent to 12.1 per cent of the working population.

So, even if corporate investment is gradually showing signs of a recovery, household consumption has yet to take off and the prospect of a rise in value-added tax (VAT) next year and persistently high energy prices are likely to continue to dampen consumer spending for some time to come.—AFP