China and Germany reported trade surpluses for March and February respectively, which lifted investors' sentiments. Both nations' trade surpluses are more than expected by economists. China was expected to report trade deficit, but disclosed its trade surplus thereby applying brakes on any thought of relaxing monetary policy to spur growth.
China's trade surplus was $5.35 billion in March, according to customs bureau. Exports witnessed 8.9 percent year-over-year growth, while imports grew 5.3 percent. Economists were expecting a trade deficit of $3.15 billion. For February, China disclosed a trade deficit of $31.5 billion which was hurt by poor exports to the European Union as a fall out from the debt crisis.
Only yesterday, China reported higher inflation than expected and muted any thoughts of loosening monetary policy. As a result of February's trade deficit and various economic factors, economists expected a loose monetary policy to stimulate growth. The second largest economy has been initiating steps to face exports slowdown to Euro Zone by focusing on emerging markets.
However, the latest data on inflation and trade surplus nearly shut the doors for any possible relaxation of monetary policy. Another factor to ponder is exports seem to be stabilizing in China given the export-gauge readings improvement for March in the purchasing managers' indexes.
Another economic data that surprised everyone is German's exports in February. Driven by demand from outside the European Union, the country's seasonally adjusted exports grew 1.6 percent over January. In January, exports gained 3.4 percent, a data from Federal Statistics Office indicated.
Exports in February were in contrast to economists' expectation for a drop of 1.2 percent. Imports climbed 3.9 percent during the same period. This resulted in a widening of the trade surplus to 14.7 billion Euros from January's 13.2 billion Euros. The current account surplus also increased to 11.1 billion Euros in February from E9.5 billion Euros in January.
Total exports in February were 91.3 billion Euros. Of this, 37.9 billion Euro came from outside the Euro Zone. This represents a month-over-month increase of 14.4 percent. However, exports within Euro Zone moderated to 4 percent versus 5.4 percent to European Union member-countries.
Germany had to depend on fast growing markets outside the Euro Zone since most of its constituents have resorted to cuts in spending in an effort to reduce budget deficits in the face of the debt crisis.
A recovering worldwide economy should be a boost to Germany's exports. Yet its main export market is within the Euro Zone. Domestic demand is expected to fuel first quarter growth before exports to foreign countries picks up later in 2012, Bloomberg quotes an ABN Amro Bank economist.