Berlin — For the first time in more than 30 years, Germany has announced a monthly trade deficit. This is the latest sign that Europe’s largest economy is facing stress due to supply chain disruptions and record energy prices associated with Russia’s war in Ukraine.
Exports have been Germany’s economic driver for many years, but the surge in energy prices caused by Russia’s move to limit the amount of natural gas it supplies to Europe has pushed up the prices of German-made products.
May exports fell 0.5% and imports rose 2.7%, leaving a gap of € 1 billion, or about $ 1 billion, according to figures released by the Federal Bureau of Statistics on Monday. It was the first time that imports exceeded exports since 1991, the year after the once socialist East Germany was reunified into capitalist West Germany.
The sudden reversal could indicate some weakness in the German economy, where one in four jobs depends on exports. Russia’s reliance on imported energy, which supplied more than half of the country’s natural gas before the start of the war, increased cost pressure on German companies.
“Exports have begun to stagnate,” said Volker Terreie, head of foreign trade for the German Chamber of Commerce and Industry. He pointed out the rising cost of German goods shipped abroad. “Exportors are less and less likely to pass on the increased costs caused by the supply chain to overseas customers,” he said.
The most important destination for German products in May was the United States, where sales increased by more than 5% from the previous month to € 13.4 billion. On the import side, China remains at the top of the list as the country that sells the most commodities to Germany, reaching € 18 billion in May and down 1.6% from April.
The decline in German goods sold in Russia is one of the causes of the decline in exports. Russia has been a strong market for German manufacturers for many years, but this trend has been declining as companies have ceased operations in the country since the invasion of Ukraine in February. Sales to Russia have fallen by more than 50% compared to a year ago.
Economists have warned that if Russia decides to cut off its gas supply altogether, the overall economic situation could be even worse. The risk has increased recently.
In June, Russia’s energy giant Gazprom reduced the amount of gas supplied to Germany via its key pipeline, Nord Stream 1, by 60%. This month, the pipeline was completely shut down for about two weeks of regular maintenance, and there is growing concern in Germany that taps could be left off when work is complete.
