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Last Updated: Friday, 8 February 2008, 10:43 GMT
Germany's trade surplus shrinking
A worker at the plant of German car parts supplier Karmann
Germany still exported more than any other country in 2007
German exports fell 1.2% in December and imports rose 5.3% compared to November, shrinking the trade surplus to 15.6bn euros ($22.6bn; 11.6bn).

Falling German exports were partly due to the strong euro, which makes them more expensive outside the eurozone.

The US dollar has fallen sharply against the euro over the past year.

Matters may now improve because the euro has been falling this week after the head of the European Central Bank hinted at future interest rate cuts.

Comparing German exports this December to those in the same month one year ago, exports were flat, the first time there has been no growth since November 2003.

"It looks like the weaker global economy and the euro's strength are having a slight impact in German foreign trade," said Sebastian Wanke at Dekabank.

"Therefore, I don't think there will be a sudden drop in exports, and that there will be positive surprises in the coming months."

World champion

Germany still managed to hold onto its title as the world's top exporter for the whole year.

Its exports for 2007 totalled 969bn euros ($1.4 trillion), according to the Federal Statistics Office, compared with China's $1.22 trillion.

"Germany defended its title as world champion in merchandise exports for the fifth year in a row, after overtaking the US in 2003," said UniCredit economist Alexander Koch.

"In the long term, however, more than 1.3 billion Chinese will outperform 82 million Germans in terms of exports," he predicted.

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