GERMANY imported a higher value of products than it exported in May, which is the first time in more than 30 years. The main reason is the rise in import prices of oil and gas under the influence of the Russian war in Ukraine.

The most populous EU country, whose economic model has been built on significant trade surpluses since World War II, recorded a deficit of 1 billion euros in May, as imports rose by almost 28 percent compared to a year earlier. Import growth amounts to 2.7 percent compared to April.

At the same time, exports fell for the third time in five months by 0.5 percent, but are still 11.7 percent higher year-on-year.

The main reason is the rise in oil and gas prices

The data are an indicator of the problems Germany is facing, whose dependence on Russian energy sources was exposed by the war in Ukraine. An increase in the foreign trade deficit is expected in June, reflecting the 60 percent reduction in Russian gas supplies, which forced importers to cover their obligations by buying on the spot market at much higher prices.

On the spot market, raw materials are traded for immediate delivery, unlike the futures market where trading is done for deliveries in the future. Generally, prices in a situation of immediate delivery are higher than when delivery is contracted for the future.

Many German analysts fear a complete interruption of Russian supplies in the second half of the year, which leads to oil and gas being bought at current prices and with immediate delivery, which is far more expensive.

Unions fear the collapse of the economy

German Chancellor Olaf Scholz is expected to hold crisis talks with union and employer representatives in Berlin about the state of the economy.

“Entire industries are at risk of collapse due to gas bottlenecks,” said Yasmin Fahimi, head of the German Trade Union Federation, in an interview with the newspaper Bild over the weekend, specifically highlighting chemicals, glass production and the aluminum industries. These are also major suppliers to the automotive sector, which is crucial to Germany's industry and its main export product.

“Such a collapse would have enormous consequences for the entire economy and jobs in Germany,” she added.

Where did Germany import the most from and where did it export to?

Exports to Russia rose by 29.4 percent, to 1 billion euros in May 2022 compared to April 2022, after a sharp drop of almost 60 percent in March 2022 compared to February 2022 and by 9.9% in April 2022 compared to March 2022. Compared to May 2021, it was 54.6 percent lower. Imports from Russia fell by 9.8 percent, to 3.3 billion euros, in May 2022 compared to April 2022, according to data from Germany's state statistical office.

Most of Germany's exports in May went to the US, 5.7 percent more than in April 2022, seasonally and calendar adjusted. Exports to the US rose to 13.4 billion euros. Exports to China rose by 0.5 percent, to 8.7 billion euros, while exports to the United Kingdom were reduced by 2.5 percent, to 5.8 billion euros.

The most imports into Germany in May 2022 came from China. Goods worth 18 billion euros were imported from there, which is a decrease of 1.6 percent compared to the previous month. Imports from the United States rose by 9.7 percent, to 7.4 billion euros. Imports from the United Kingdom fell by 2 percent, to 3.4 billion euros in the same period.

Both total exports and total imports are higher compared to May 2019, before the pandemic years 2020 and 2021. That year, total monthly exports for May amounted to 110.2 billion euros, while in May 2022 they amounted to 125.8 billion euros. However, most of that nominal growth can be explained by inflation.

Total imports in May 2019 amounted to 91.1 billion euros, and in the same month this year 125.8 billion euros. Before the pandemic, Germany achieved 15 to 20 billion euros more in exports than imports each month, which was the backbone of its economy. But since September 2021, the surplus has been shrinking month by month, all the way to the first deficit in more than 30 years for May 2022.

Source: index.hr