Germany has moved into a trade deficit of $1bn, meaning the country’s imports have outstripped exports. This is the first time the European country has been in a trade deficit in more than 30 years. The deficit was caused by a rise in energy prices, increasing the cost of imports to the economy, which is the largest in Europe.
Meanwhile, global trade disruption weighed down exports.
Imports increased 2.7 percent to €126.7 billion from April to May, according to data from the federal statistical agency (FSA).
Meanwhile, month-on-month exports fell 0.5 percent to €125.8 billion.
Top German industries have warned that they are facing collapse as a result of cuts in the supplies of Russian natural gas.
Yasmin Fahimi, head of the German Federation of Trade Unions (DGB) told German outlet Bild: “Because of the gas bottlenecks, entire industries are in danger of permanently collapsing: aluminium, glass, the chemical industry.
“Such a collapse would have massive consequences for the entire economy and jobs in Germany.”
Ms Fahimi is calling for a price cap on energy for households to tackle record inflation arising as a result of the energy crisis.
She warned the crisis could lead to social and labour unrest.
German chancellor Olaf Scholz warned that the crisis “won’t pass in a few months”.
Mr Scholz said that the crisis is likely to be drawn out as a result of the war in Ukraine, which he said “has changed everything, and supply chains are still disrupted by the pandemic”.
Claus Vistesen, an economist at Pantheon Macroeconomics, agreed, warning that the deficit is expected to continue throughout the summer.
Speaking to the Financial Times, the economist said: “Germany’s trade surplus has now evaporated, thanks mainly to soaring imports, offsetting otherwise decent momentum in exports.”
Meanwhile, Rainer Dulger, head of the Confederation of German Employers’ Associations, warned that Germany is facing the “toughest economic and social crisis since reunification”.
He added: “Difficult years lie ahead of us.
“We can no longer take for granted the continuous economic growth that we experienced before the Covid-19 pandemic and the Ukraine war.”
Additional reporting by Monika Pallenberg.
