Feb. 9 (Bloomberg) -- Exports from Germany, Europe’s largest economy, declined in December after dropping by a record the previous month, adding to signs the recession is deepening.

Sales abroad, adjusted for working days and seasonal changes, fell 3.7 percent from November, when they dropped 10.8 percent, the Federal Statistics Office in Wiesbaden said today. Economists expected a decline of 4 percent, the median of 11 forecasts in a Bloomberg News survey showed.

German companies are paring output and cutting jobs as the global financial crisis damps export demand. Volkswagen AG, Europe’s biggest carmaker, said deliveries fell about 20 percent last month. The government expects the economy to contract 2.25 percent this year.

German exporters “are suffering from the complete collapse of world trade,” said Carsten Brzeski, an economist at ING Group in Brussels. “Even more worrying, the worst is yet to come.”

Imports fell 4.1 percent in December from November, the statistics office said. The trade surplus narrowed to 6.9 billion euros ($8.9 billion) from 9.9 billion euros in November. The surplus in the current account, the measure of all trade including services, was 12.3 billion euros.

In 2008, German exports increased 2.8 percent while imports rose 5.8 percent, today’s report showed. The main drivers of foreign trade were shipments to countries outside the European Union, which rose 6 percent. Sales to the European Union rose 1.1 percent, according to the statement.

Germany’s economy contracted as much as 2 percent in the final three months of 2008, the statistics Office said on Jan. 14. BNP Paribas economist Dominic Bryant estimates the economy may shrink as much as 3.3 percent this year.

“Ultimately, Germany is suffering from an over-reliance on exports and manufacturing,” Bryant said.

‘Fully Weighing’

German manufacturing industries contracted for a sixth month in January. Industrial output and manufacturing orders plunged in December, the government said last week.

“The first five weeks of the year have shown that the crisis is fully weighing on us,” Detlef Wittig, Volkswagen’s sales chief, told Bloomberg on Feb. 5.

“As an export nation we are strongly feeling the global economic cooling” and “cannot dodge the negative impact of the global financial crisis,” Bundesbank President Axel Weber said last week. “We still assume that the contraction in the first quarter will be followed by a phase of stabilization and in the next year a slight revival.”

German business and investor confidence both rose last month on the expectation that government stimulus programs would help to revive the economy.

To contact the reporter on this story: Gabi Thesing in Frankfurt at gthesing@bloomberg.net

Last Updated: February 9, 2009 03:26 EST