Germany has slipped into a $1 billion trade deficit, meaning the country’s imports have outpaced exports. It is the first time in more than 30 years that the European country has a trade deficit. The deficit was caused by an increase in energy prices, which increased import costs for the economy, the largest in Europe.
Meanwhile, the disruption in world trade weighed on exports.
According to data from the Federal Statistical Office (FSA), imports rose 2.7 percent from April to May to EUR 126.7 billion.
Meanwhile, month-on-month exports fell 0.5 percent to 125.8 billion euros.
Germany’s top industries have warned they are on the brink of collapse due to cuts to Russia’s natural gas supply.
Yasmin Fahimi, head of the German Federation of Trade Unions (DGB), told Bild: “Due to the gas bottlenecks, entire industries are in danger of permanent collapse: aluminum, glass, the chemical industry.
“Such a collapse would have huge consequences for the entire economy and jobs in Germany.”
Ms Fahimi calls for a price cap for household energy to deal with the record inflation caused by the energy crisis.
She warned that the crisis could lead to social and labor unrest.
German Chancellor Olaf Scholz warned that the crisis “will not be over in a few months”.
Mr Scholz said the crisis is likely to continue 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 persist through the summer.
Speaking to the Financial Times, the economist said: “Germany’s trade surplus has now evaporated, mainly thanks to rising imports, offsetting the otherwise decent momentum in exports.”
Meanwhile, Rainer Dulger, head of the Confederation of German Employers’ Associations, warned that Germany is facing the “worst economic and social crisis since reunification”.
He added: “There are difficult years ahead of us.
“We can no longer take for granted the continued economic growth we experienced before the Covid-19 pandemic and the war in Ukraine.”
Additional reporting by Monika Pallenberg.