Germany posts first monthly trade deficit in 30 years
BERLIN — For the first time in more than three decades, Germany recorded a monthly trade deficit, the most recent sign that Europe’s largest economy is facing strains due to interrupted supply chains and record energy prices linked to Russia’s war in Ukraine.
Exports have been Germany’s economic engine for years, but soaring energy prices, driven by Russia’s measures to limit the amount of natural gas it delivers to Europe, drove up the price of products made in Germany.
Exports in May fell 0.5% from April, while imports rose 2.7%, leaving a gap of 1 billion euros, or around $1 billion, figures showed on Monday. by the Federal Statistical Office. It was the first time that imports exceeded exports since 1991, the year after the reunification of the former socialist East Germany with capitalist West Germany.
The sudden reversal could signal weakness in parts of the German economy, where one in four jobs depends on exports. Dependence on imported energy – before the start of the war, Russia supplied more than half of the country’s natural gas – has added cost pressure on German companies.
“The downturn in exports has started,” said Volker Treier, head of foreign trade at the Association of German Chambers of Commerce and Industry. He pointed to the rising cost of German goods being shipped overseas. “Exporters are increasingly unable to pass on cost increases caused by supply chains to international customers,” he said.
The United States remained the main destination for German products in May, with sales up more than 5% compared to the previous month, at 13.4 billion euros. On the import side, China remained the country selling the most goods to Germany, worth 18 billion euros in May, down 1.6% from April.
The decrease in German goods sold in Russia was one of the causes of the drop in exports. For years Russia has been an important market for German manufacturers, but since the invasion of Ukraine in February the trend has been down as companies have stopped doing business in the country. Compared to a year ago, sales to Russia have fallen by more than 50%.
Economists warn that the global economic situation could become even more serious if Russia decides to completely cut off its gas supplies. This risk has increased recently.
In June, Gazprom, the Russian energy giant, reduced the amount of gas delivered to Germany via Nord Stream 1, a vital gas pipeline, by 60%. This month, the pipeline will be completely shut down for scheduled maintenance for about two weeks, raising fears in Germany that the company may leave the taps closed after the work is complete.