Germany’s First Trade Deficit in 30 Years as Energy Crisis Deepens

Germany posted its first monthly trade deficit in more than 30 years in May as the price of oil and natural gas imports surged amid Russia's war in Ukraine.

Europe's largest country, whose economic model since the Second World War has been built on substantial trade surpluses, 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 2.7% higher than in 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% year-on-year. The data is a strong indication of the problems facing Germany, whose dependence on Russian energy has been brutally exposed by the war. The deficit is expected to widen further in June as Russia's 60% cut in gas supplies forces importers to meet their obligations by buying on the spot market at much higher prices. Many German analysts fear a complete shutdown of Russian supplies in the second half of the year. The news comes at the start of the day when German Chancellor Olaf Scholz will hold crisis talks in Berlin with trade union and employer representatives on the state of the economy. "Entire sectors are in danger of collapsing forever because of gas bottlenecks," Yasmin Fahimi, president of the Federation of German Trade Unions, told Bild am Sonntag newspaper over the weekend, citing the chemical, glass and aluminum industries, which are the main suppliers to the automotive industry. "Such a collapse would have huge consequences for the entire economy and jobs in Germany," he added. The euro has lost about 7.4% against the dollar since the start of the war, hitting a five-year low in May. It was unchanged at $1.0434 at 03:10 ET (0710 GMT).