The January slump followed a 3.4 percent surge in exports in December, which in turn followed a 1.6 percent gain in November.

Analysts had forecast a rise of about 0.5 percent in January.

Amid signs of weak domestic demand, German exports have emerged as the key driving force behind the nation's recovery from what has been its steepest economic downturn in more than six decades.

"This surprisingly bad figure probably does not mark the end of the recovery in exports," said Commerzbank economist Simon Junker.

"Despite exports backtracking, we are retaining our prediction that the German economy will continue to recover and that foreign trade will play a major role in driving this recovery," he said.

In particular, Germany's exporters are looking to the world's leading emerging economies, such as China, to boost the nation's foreign order books.

Figures also released in Beijing Wednesday showed China's exports surging by 46 percent in February versus the same month in 2009, cementing the Asian powerhouse's lead over Germany as the world's top exporter.

The Federal Statistics Office also monthly imports dropped by 6 percent in January.

As a consequence, the trade surplus narrowed to 8.7 billion euros ($11.8 billion) from 16.6 billion euros in December.

Year on year, January exports edged up 0.2 percent, while imports slumped 1.4 percent compared with the same month in 2009.

The release of the latest trade figures follow a slew of new data and economic indicators which have painted a mixed picture of the German economy as the new year got underway.

After the economy stagnated during the fourth quarter of last year, signs have also now emerged that Europe's extreme winter weather might have left a dent in Germany's economic growth rate during the first three months of 2010.

While German factory order books swelled by 4.3 percent in January, output edged up by just 0.6 percent as cold winter weather hit industrial production, dragged down by business sectors relying on outside work such as construction.

German business confidence posted its first monthly decline in 10 months in February, partly as a result of the long period of sub-zero temperatures and regular snow falls.

However, most economists are still expecting Germany to report modest economic growth in 2010 after the country emerged from recession during the second quarter of last year.

Germany's central bank, the Bundesbank, forecasts growth for the nation this year of 1.6 percent after the economy shrunk by a dramatic 5 percent in 2009.