🔮 Better than the Oracle? Our Fair Value found this +42% bagger 5 months before Buffett bought itRead More

Germany Posts 1st Trade Deficit in Over 30 Years as Energy Crisis Deepens

Published 07/04/2022, 02:53 AM
Updated 07/04/2022, 03:05 AM
© Reuters
EUR/USD
-

By Geoffrey Smith 

Investing.com -- Germany posted its first monthly trade deficit in over 30 years in May as the price of its oil and gas imports soared in the pull of Russia's war in Ukraine. 

Europe's largest country, whose economic model has been built on substantial trade surpluses since the Second World War, swung to a deficit of €1.0 billion ($1.04 billion) in May, as its import bill surged by nearly 28% from a year earlier. Imports were up 2.7% from April. 

At the same time, exports fell for the third time in five months, by 0.5% in calendar- and seasonally-adjusted terms, but were still up 11.7% on the year. 

The data are a powerful illustration of the problems facing Germany, whose dependence on Russian energy was brutally exposed by the war. The deficit is set to widen in June, reflecting a 60% cut in Russian gas supplies that forced importers to cover their obligations by buying on the spot market at much higher prices. Many German analysts fear a complete stop to Russian supplies in the second half of the year.

The news comes at the start of a day when German Chancellor Olaf Scholz is set to hold crisis talks with union and employers' representatives in Berlin on the state of the economy. 

“Entire industries are in danger of collapsing forever because of the gas bottlenecks," Yasmin Fahimi, the head of the German Federation of Trade Unions, told the newspaper Bild am Sonntag in an interview at the weekend, singling out the chemicals, glass-making, and aluminum industries, all of which are major suppliers to the key automotive sector. "Such a collapse would have massive consequences for the entire economy and jobs in Germany,” she added.

The euro has fallen some 7.4% against the dollar since the war started, hitting a five-year low in May. It was unchanged at $1.0434 by 03:10 AM ET (0710 GMT).

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.