Germany saw its first trade deficit in three decades in May while its exports to Russia took an unexpected upward spike, despite sanctions against the government of Vladimir Putin.
What Happened: The German Federal Statistical Office reported the exports to Russia were up 29.4% from April to May. This reverses the trend that occurred when Germany sanctioned Russia for its invasion of Ukraine. In March, exports bound for Russia were down by 60% from February, when Russia’s war in Ukraine began, and dropped another 9% in April.
The New York Times observed that year-over-year sales of German goods to Russia have plummeted by more than 50%. As per the European Union sanctions of Russia, the German products exported to Russia include health-related items, pharmaceuticals, food and agriculture.
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What Else Happened: Overall exports from Germany dropped by 0.5% from April while imports were up 2.7%. This resulted in a $1 billion trade deficit, the first for Germany since its reunification in 1991.
The U.S. remained the main market for German exports while China was the primary source of imports.
“The export downturn has begun,” said Volker Treier, the head of foreign trade at the Association of German Chambers of Commerce and Industry, to the New York Times. “Exporters are less and less able to pass on cost increases caused by supply chains to international customers,” he said.
Photo: Christian Dorn / Pixabay
