German exports fell unexpectedly in July but imports rose, underscoring that the domestic economy will be key for growth in Germany this year as a weak global environment makes selling goods abroad hard.
Seasonally-adjusted exports dropped by 1.1 percent on the month, data from the Federal Statistics Office showed on Friday, missing the consensus forecast in a Reuters poll for a 0.8 percent increase.
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Imports, forecast to gain 0.9 percent, rose by a less-than-expected 0.5 percent but an originally reported 0.8 percent fall in June was revised to a deeper 1.0 percent drop.
"It's a disappointment, but the data have fluctuated a lot in recent months," said Stefan Schilbe at HSBC Trinkaus.
(Read more: German Imports, Exports in Surprise Slump in February)
"But we can be hopefull that the picture will change for the better in coming months. Leading indicators in industrial states - from the United States to Britain and the euro zone states - are pointing upwards."
A bastion of strength in the early years of the euro zone crisis, the German economy narrowly avoided a recession at the start of the year before returning to 0.7 percent growth in the second quarter.
With exports, traditionally the backbone of the German economy, subdued, domestic demand has been the driver so far this year when analysts expect Europe's largest economy to outperform and support the nascent euro zone recovery.
(Read more: German July industry orders fall, but recovery trend intact)
The drop in exports was driven by a 0.7 percent decrease in sales to the euro zone, which buys roughly a third of German goods and services, and a 1.0 percent fall in sales to non-EU states, likely due to weakness in emerging nations and the United States.
Germany's trade association BGA expects exports to grow by 3 percent this year, implying a strong increase after July, as data showed exports between January and July were down 0.5 percent from a year earlier.