Jul 04, 2022 03:05AM ET
By: AnalysisWatch
Germany posted its first monthly trade deficit in more than 30 years in May as prices for its oil and gas imports soared in the wake of Russia's war in Ukraine.
Europe's largest country, whose economic model has been based on substantial trade surpluses since World War II, posted a deficit of €1.0 billion ($1.04 billion) in May as its import bill rose 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, down 0.5% (calendar-and seasonally-adjusted) but still 11.7% from a year earlier.
The data vividly illustrates the problems facing Germany, whose dependence on Russian energy has been brutally exposed by the war. The deficit is expected to widen in June as Russian gas supplies are cut by 60%, forcing importers to meet their obligations by buying on the spot market at much higher prices.
Many German analysts fear a complete halt to Russian supplies in the second half of the year.
The news comes at the start of a day when German Chancellor Olaf Scholz will hold crisis talks in Berlin with union and employer representatives on the state of the economy.
The head of the German Federation of Trade Unions, Yasmin Fahimi, said in an interview with Bild am Sonntag over the weekend that "the gas shortages threaten the final collapse of entire industries," all of which are important suppliers to the key automotive sector. "Such a collapse would have massive consequences for the entire economy and jobs in Germany," she added.
Since the war began, the euro has fallen about 7.4% against the dollar, hitting a five-year low in May. At 03:10 AM ET, it was unchanged at $1.0434.