German Exports Recovered in June; Imports Flat Amid China Lockdown Problems

By Geoffrey Smith 

Investing.com -- Germany's export motor sprang back into life in June, while the country made further progress in re-directing its energy purchases away from Russia.

Exports rose 4.5% from May to 134.3 billion euros ($137 billion). That was their biggest monthly gain since Russia's invasion of Ukraine in February. Exports were also up over 18% from the same month a year earlier, when the effects of the pandemic on German output were more severe.

Imports meanwhile edged up 0.2% in calendar and seasonally adjusted terms, but were still up by nearly 28% from a year earlier, reflecting the sharp rise in energy prices over the last four months.

Germany has been scrambling to reduce its dependence on Russian energy since the invasion, but its ability to do so is limited owing to the lack of alternative import infrastructure for natural gas, having bet heavily on the construction of two pipelines from Russia over the last 15 years.

Imports from Russia actually rose 4.8% on the month to 3.5 billion euros due to price effects, another uncomfortable reminder of how Europe's energy purchases are key to financing the Russian government, but imports from the U.S. and U.K., two other traditional sources of energy, rose faster, by nearly 15% and 6.6% respectively.

On the import side, the figures continued to show the impact of lockdown restrictions in China that were only lifted toward the end of the month. Imports from China fell 3.9% from May.

The war in Ukraine continues to cast a long shadow over the German economy, however. Since the cut-off date for the trade figures, Russia has unilaterally reduced gas shipments to only 20% of their normal level, raising the threat of rationing this winter that would first and foremost hurt industrial users. Elsewhere on Wednesday, Commerzbank (ETR:CBKG) warned of a sharp recession if - as many expect - Russia completely shuts off gas flows, while automaker BMW (ETR:BMWG) also predicted that its deliveries this year would fall from 2021 levels.

The euro lost nearly half a cent against the dollar after the release, although that was due in part to broader concerns for the world economy as U.S. House of Representatives Speaker Nancy Pelosi's visit to Taiwan raises tensions between the U.S. and China. Germany's current account surplus has been a key prop for the euro throughout its lifetime, but the surge in the country's energy bill has severely eaten into that surplus. The merchandise trade surplus of 6.4 billion euros was down by over half from a year earlier.