German balance of trade data due

Germany’s balance of trade data for May, set to be released today, will likely show an increase from April’s record low.

Germany’s trade surplus declined well below market expectations to €3.5 billion last month due to COVID-19, a level not seen for two decades. While the country’s relatively successful re-emergence from lockdown had boosted expectations of a prompt rebound in exports, weak May growth in industrial yields has tempered short-term optimism. The data reveals the effect of sustained supply chain disruption on a particularly export-reliant economy.

May’s numbers will likely reflect the controlled and gradual economic re-opening instituted by the German government. Expect the positive trajectory to be maintained in the short-term especially as demand from China and EU member states picks up. The German Chamber of Commerce estimates a 15% decrease in exports this year and a 7% increase in 2021, indicating that a return to pre-pandemic levels is a long way off.

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