Germany has a trade deficit for the first time in three decades.
Some of Germany’s main trading partners have been unhappy with the country’s long-term surplus, seeing it as a sign that Germany is not fully supporting domestic demand, but relies on foreign markets.
In June, the U.S. Treasury Department listed Germany among 12 countries “notable for its monetary practices and macroeconomic policies.”
The agency estimates Germany’s trade surplus with the U.S. will grow to $73 billion by 2021, from $57 billion in 2020.
Due to the Ukraine crisis, Europe’s largest economy saw energy imports soar while exports went backwards.
Germany’s May exports fell 0.5 percent from April, while imports rose 2.7 percent.
As a result, the industrial powerhouse imported a billion euros, or about $1 billion.
Meanwhile, Germany’s trade surplus in April 2022 and May 2021 was €3.1 billion and €13.4 billion, respectively.
It was the first month of a trade deficit since 1991, after German reunification.
This unexpected change adds to other difficulties, including the impact of high energy prices on household spending and the threat of having to allocate gas if Russia continues to cut supply.
“The macro data shows how dependent Germany is on foreign demand as well as the supply of foreign raw materials, energy and intermediate products,” said Oliver Rakau, economist at Oxford.
According to him, in all respects, the German economy is being challenged.
Germany’s shift in trade balance was partly driven by rising energy prices, as the Ukraine crisis erupted.