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Photograph: Photo by Sodanie Chea, used under CC BY

German factory orders fell sharply in April as a slump in foreign demand highlighted the impact on Europe's biggest economy of a slowdown in global trade.

Monthly industrial orders contracted by a more-than-forecast 2 per cent in April after bounding ahead by an upwardly revised 2.6 per cent in March, the Economics Ministry said on Monday. Order books shrank 0.5 per cent from April last year.

"The weak start to the second quarter was largely a result of fluctuating orders for capital goods from countries outside the eurozone," the ministry said.

Still, the ministry said the trend for a moderate expansion in order books remained intact.

The fall in April was more than four times the 0.5-per-cent decline predicted by analysts. The ministry had previously estimated the April increase at 1.9 per cent.

Leading the drop in April was a 4.3-per-cent drop in foreign orders after demand from outside the eurozone plunged by 8.3 per cent.

Orders from Germany's key eurozone trading partners rose by 2.5 per cent.

Domestic orders were up a solid 1.3 per cent in April, the ministry said.

Germany's central bank lowered its growth outlook on Friday after the slowdown in China and other major emerging markets took its toll on foreign demand.

Gross domestic product (GDP) in Germany will grow by 1.7 per cent this year before dropping back to 1.4 per cent in 2017, the Bundesbank said in a statement. Growth should then rebound to 1.6 per cent in 2018.

In December, the bank set out a GDP projection for 2016 of 1.8 per cent. The 2017 forecast has been cut from 1.7 per cent.

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