RPT-Slowdown in machinery exports points to weakening German economy

Trade conflicts and a weakening global economy have hit growth in Germany's export-reliant machine-building sector, data showed on Wednesday, adding to signs that Europe's largest economy could slip into a recession. Exports grew by just 0.9% to 89.2 billion euros ($99 billion) in the first half of the year, according to figures released by industry association VDMA, as growth in the first quarter was all but wiped out by a contraction in the second.

"The uncertainty triggered by the trade conflict between the United States and China in particular, as well as the lack of prospects for an agreement on Brexit, are hurting our export-focused sector," said Ralph Wiechers, chief economist at VDMA. Machine exports grew by 3.8% in the first quarter and fell by 1.8% in the three months that followed.

The German economy contracted by 0.1% in the second quarter, prompting calls for Finance Minister Olaf Scholz to ditch the country's balanced budget rules and draft a stimulus package. The VDMA data, which the association said is based on figures from the Federal Statistics Office, showed exports to the United States had risen by 7.8% in the first six half, accounting for more than 11% of total output. But demand from China rose by just 0.6%.

($1 = 0.9006 euros)