According to data from the country’s statistics agency, a rise in the value of imports and a slight decline in exports pushed Europe’s largest economy into a trade deficit of €1 billion (£860 million) in May.
According to Bloomberg, the monthly deficit was the country’s first since the year following German reunification.
Exports fell 0.5 percent from the previous month to €125.8 billion in May, while imports increased 2.7 percent to €126.7 billion, exceeding City economists’ expectations. Exports increased by nearly 12% in comparison to the same month last year, while imports increased by nearly 30%.
German’s dominant manufacturing base has been disrupted by global supply chain issues caused by the pandemic and Chinese lockdowns. Rising energy prices and weaker goods demand are also weighing on demand.
Manufacturing output in the eurozone fell in June for the first time since the depths of the initial lockdowns in 2020, according to data released on Friday, indicating worsening economic conditions across the single currency bloc.
According to the most recent trade figures, import prices such as energy, food, and industrial components increased by more than 30% in May compared to a year ago, while export prices increased at roughly half the rate.
The figures come as Russia’s war in Ukraine drives up energy prices across Europe, causing inflation and affecting the trade balance of countries that rely on oil and gas imports for a large portion of their energy needs.
The UK’s current account deficit, which measures cross-border trade and financial flows, reached its highest level since records began in the 1950s in the first quarter of this year. Although this is primarily due to the rising cost of fuel imports, it also comes as many British exporters deal with Brexit-related disruptions such as border issues and reams of red tape.
Russia’s current account surplus, on the other hand, more than tripled in the first four months of the year, reaching its highest level since at least 1994. The increase was driven by rising gas prices, which increased the value of exports, and western sanctions, which reduced imports.
German exports to Russia fell by nearly 60% in March following the invasion of Ukraine, and by another 10% in April. Exports recovered on a monthly basis for the first time in May, increasing by nearly 30% to €1 billion. Russian imports into Germany fell 9.8 percent to €3.3 billion.
According to Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, a sharp slowdown in Russian gas supplies to Germany would reduce the volume of imports, but the value would rise as the overall cost of energy rose.
“Germany’s trade surplus has now vanished, owing primarily to soaring imports, offsetting otherwise solid export momentum,” he said. “We anticipate that the external balance will remain in deficit over the summer.”
