Germany has recorded its first monthly trade deficit since 1991 amid rising inflation and a disruption in the supply chain that weighs on the country’s industrial base.
Figures from the country’s statistics agency showed that an increase in the value of imports and a modest decline in exports had pushed Europe’s largest economy into a trade deficit of 1 billion euros ( 860 million pounds) in May.
The monthly deficit was the first in the country since the year after German reunification, according to Bloomberg.
Exports fell by 0.5% in May compared to the previous month to 125.8 billion euros, while imports rose by 2.7% to 126.7 billion euros, more than expected by the city’s economists . Compared to the same month last year, exports increased by almost 12%, while the value of imports increased by almost 30%.
The dominant German manufacturing base has faced disruption of global supply chain problems caused by the pandemic and blockages in China. Rising energy prices and weaker demand for goods are also affecting demand.
Figures released on Friday showed that manufacturing output across the eurozone fell in June for the first time since the depths of the initial blockades in 2020, a sign of worsening economic conditions in the single currency bloc.
According to the latest trade data, the prices of imports such as energy, food and industrial components increased by more than 30% in May compared to a year ago, while export prices increased by approximately half.
The figures come as Russia’s war in Ukraine raises energy prices in Europe, raising inflation and affecting the trade balance of countries that depend on oil and gas imports for much of their energy needs.
The UK’s current account deficit, which measures cross-border trade and financial flows, rose in the first quarter of this year to its highest level since records began in the 1950s. While largely due to the rising cost of fuel imports, it also occurs when many British exporters face the disruption of Brexit due to border problems and bureaucracy.
In contrast, Russia’s current account surplus 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 raised the value of exports and Western sanctions caused a drop in imports. .
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German exports to Russia fell by almost 60% in March after the invasion of Ukraine, and fell again by almost 10% in April. Exports recovered monthly for the first time in May, increasing by almost 30% to reach 1 billion euros. German imports from Russia fell 9.8% to 3.3 billion euros.
Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said a sharp slowdown in Russian gas supplies to Germany would drag up the volume of imports, but that the value would increase as the overall cost of energy increases. energy.
“Germany’s trade surplus has evaporated, thanks mainly to rising imports, offsetting a decent pace of exports,” he said. “Looking to the future, we suspect the external balance will remain in deficit over the summer.”