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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