The costs of imports soared while foreign sales dropped for the export-oriented economy
Declining exports along with a surging cost of imports caused a €1 billion ($1.04 billion) trade imbalance in Germany in May, data revealed on Monday by the Federal Statistical Office (Destatis) shows.
The first trade deficit in more than three decades came as German businesses faced soaring costs for imports and softer demand abroad for their goods amid gloomy economic prospects.
In May, cross-border sales saw a 0.5% decline, while imports rose 2.7%. Year-on-year, German exports and imports rose by 11.7% and 27.8% to €125.8 billion and €126.7 billion, respectively.
Destatis data showed the country’s exports to Russia surged 29.4% to €1 billion in May compared to April but declined by a hefty 54.6% versus May 2021. Germany’s imports from Russia dropped 9.8% month-on-month in May.
International supply chains have been substantially undermined by China’s latest Covid-related lockdowns, sanctions against Russia and the conflict in Ukraine. This has entailed significant fallout for Germany’s export-reliant economy.
The cost of imports, including food, energy, and spare parts used by the country’s manufacturers, surged over 30% in May versus a year ago, while the prices German exporters were able to charge increased at only about half that rate.
“It’s not that surprising that exports are declining in the current environment,” Oliver Rakau, an economist at Oxford Economics in Frankfurt told Bloomberg. “You have to focus on the imports, and there especially on price developments.”
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