German Exports Slide in May as Frontloading Effects Fade
Germany’s exports declined in May, as the temporary boost from earlier frontloading activity continued to unwind, erasing gains recorded earlier in the year.
Month-over-month, exports dropped by 1.4% in May, following a 1.6% decrease in April. These consecutive declines have now fully offset the export surge seen in February and March, which was primarily driven by frontloaded shipments.
Meanwhile, imports experienced an even sharper fall, dropping nearly 4% in May. This widened Germany’s trade surplus to €18.4 billion.
Despite the recent downturn, the United States remains Germany’s top export destination. Data indicates that the previous upswing was almost entirely fueled by U.S. frontloading—a short-lived effect that has now tapered off.
According to analysts at ING, German exports are likely to face ongoing headwinds. The potential imposition of new tariffs continues to pose a risk to both German and broader European trade. On top of that, the strengthening euro—both against the U.S. dollar and in nominal effective terms—is adding further pressure on exporters.
With economic indicators available for April and May, ING analysts suggest Germany may be heading into another phase of stagnation, or possibly a mild contraction in the second quarter. Although industrial production posted a slight gain, it is not enough to offset declines in retail sales and construction activity compared to the first quarter.
Given the current levels of uncertainty and market volatility, it remains too early to confirm whether the economy will contract in Q2. While business sentiment has improved and optimism is building, ING believes tangible signs of economic recovery may not appear until later in the year—possibly not before the third quarter.
