Germany reported its first monthly trade deficit in goods for more than
three decades as a result of higher energy import costs and trade disruptions with Russia and China.
Rising energy prices pushed up the value of imports in Europe’s largest economy, while global trade disruptions weighed on exports, causing a $1 billion deficit in May.
“In the past. Germany could always count on strong exports to revive the economy and today’s figures show that the trade balance will not return as a positive element of growth, at least for the next few years,” said Carsten Brzeski, head of macro research at ING.
Exports from Germany in May fell 0.5 percent from April to 125.8 billion euros, while imports rose 2.7 percent month-on-month to 126.7 billion euros, according to data released by the Federal Statistical Office on Monday. The trade deficit was the country’s first since 1991.
Russia’s invasion of Ukraine and the sanctions imposed on it
Moscow by western countries has hit trade along with China’s coronavirus lockdowns, depressing demand for goods from Germany
The decline in overall German exports was partly due to a 2.8 percent monthly drop in exports to other EU countries, while imports from
these countries rose by 2.5 percent. Exports to the US rose 5.7 percent and those to China 0.5 percent, but exports to the UK fell 2.5 percent.
Economists expect high energy prices and weak exports to hurt German growth this year. ING forecasts that Germany’s gross domestic product will contract in the second quarter, and Brzeski said: “There is a high probability that Germany and the rest of the euro area will enter a recession this year.”
German import prices rose more than 30 percent in the year to May – reflecting rising energy and commodity prices – while export prices rose almost 16 percent over the same period. While trade data is reported on a nominal basis, the data is adjusted for inflation when calculating GDP.
“Germany’s trade surplus has now evaporated, largely thanks to the rally
Imports offsetting otherwise decent momentum in exports,” said Claus Vistesen, economist at Pantheon Macroeconomics, adding that he
expects Germany to continue running a trade deficit in the summer.
German exports to Russia partially recovered from their recent declines, rising almost 30 percent month-on-month to €1 billion, but remaining less than half the level of a year ago. German imports from Russia fell by almost 10 percent to 3.3 billion euros. Moscow has halted natural gas supplies to Germany in recent weeks, raising fears of a shortage that could force some industrial production to shut down.
Many German companies announced they would cut ties with Russia after the EU imposed sanctions on thousands of Russian individuals and companies. Brussels plans to ban EU imports of Russian oil as part of a sixth package of sanctions against Moscow.
Similarly, the trade balance of the whole euro zone deteriorated, which posted a goods trade deficit of €32.4 billion in April, a reversal from a surplus of €14.9 billion a year earlier. Euro-zone trade figures for May are due to be released on July 15.