Russia business collapses
German exports are picking up unexpectedly
4/4/2022 9:43 am
German foreign trade picked up again in February, mainly because of the good business with the EU countries. According to experts, the extent to which the sanctions will affect export restrictions will only become clear later.
Despite the collapse in business with Russia, German exports rose to a record level in February. In February, they grew by a seasonally and calendar-adjusted 6.4 percent to a record 124.7 billion euros, mainly because of the good business with the EU countries, as reported by the Federal Statistical Office. Economists surveyed had only expected a 1.5 percent increase after a 3.0 percent drop in January.
This time, imports also increased sharply by 4.5 percent and also reached a record value of 113.1 billion euros after having fallen by 4.0 percent at the beginning of the year. Here, experts had predicted an increase of 1.4 percent. In February, exports to Russia bucked the trend by 6.3 percent compared to the previous month, and imports by as much as 7.4 percent.
“Foreign trade with Russia was only restricted from the end of February 2022 due to Russia’s attack on Ukraine and the sanctions imposed as a result,” the statisticians explained. The extent to which Western sanctions and other measures to restrict exports are having an effect should only become more clear from the March figures, it said. Experts expect strong slumps.
“The negative foreign trade data with the Russian Federation in February is probably still relatively good compared to what will be published in the coming months,” said VP Bank’s chief economist, Thomas Gitzel. “The Russia trade will literally collapse.” In contrast, German exports to the EU countries grew by 10.4 percent in February compared to the previous month, those to the most important trading partner China by 6.4 percent and those to the USA by 2.7 percent.
Growth could soon slow noticeably
However, things are unlikely to continue at this pace, because the mood among German exporters plummeted after the outbreak of war in Ukraine on February 24: the barometer for export expectations fell to minus 2.3 points in March after it had was still at plus 17.0 points, as the Ifo Institute found out in its monthly company survey.
So far, there has only been a sharper decline at the beginning of the Corona crisis in April 2020. “Companies with economic ties to Russia in particular are much more pessimistic about the coming months,” said Ifo President Clemens Fuest. “Export growth will slow noticeably.”