Rising energy prices pushed up the cost of imports into Europe’s biggest economy in May, while global trade disruption weighed on exports, causing a $1 billion deficit — the first since 1991. The figures contrasted with years which Germany’s manufacturing exports drove the country’s growth and made it the powerhouse of the EU economy. Warning on Monday that Germany faced a “historic challenge”, Chancellor Olaf Scholz added that “the crisis will not pass in a few months” because Russia’s war in Ukraine “has changed everything and supply chains are still being disrupted by pandemic”. Sanctions imposed on Moscow by Western countries have also hit trade, along with China’s coronavirus lockdowns, squeezing demand for goods from Germany’s export-focused economy. Scholz spoke after talks with union leaders, economists and employers’ groups aimed at tackling the cost of living crisis. Rainer Dülger, head of the Confederation of German Employers’ Associations, said after Monday’s meeting hosted by Scholz that Germany was facing “the toughest economic and social crisis since reunification”. “Difficult years await us,” he added. “We can no longer take for granted the continued economic growth we experienced before the Covid-19 pandemic and the Ukraine war.” Imports rose 2.7 percent to 126.7 billion euros from May to April, while monthly exports fell 0.5 percent to 125.8 billion euros, data from the Federal Statistics Office showed on Monday. service. “Germany’s trade surplus has now evaporated, mainly thanks to a surge in imports, offsetting otherwise decent momentum in exports,” said Claus Vistesen, economist at Pantheon Macroeconomics. He added that he expects the country to continue running a trade deficit in the summer. The May drop in overall German exports was partly due to a 2.8 percent monthly drop in exports to other EU countries, while imports from those countries rose 2.5 percent. Exports to the US rose 5.7 percent and those to China rose 0.5 percent, but exports to the UK fell 2.5 percent. “In the past. Germany has always been able to rely on strong exports to revive the economy and today’s numbers show that the trade balance will not return as a growth positive for at least the next two years,” said Carsten Brzeski, head of macroeconomic research at ING. Economists expect high energy prices and weak exports to hurt German growth this year. ING forecasts that German gross domestic product will contract in the second quarter, and Brzeski said: “There is a strong possibility that Germany and the rest of the eurozone will enter a recession this year.”

German import prices rose more than 30 percent in the year to May – reflecting rising energy and commodity prices – while export prices rose nearly 16 percent over the same period. While trade figures are reported on a nominal basis, the data is adjusted for inflation when calculating GDP. German exports to Russia recovered some of their recent declines, rising almost 30 percent from the previous month to 1 billion euros, but remain less than half the level of a year ago. German imports from Russia fell almost 10 percent to 3.3 billion euros. Moscow has cut gas supplies to Germany in recent weeks, raising fears of a shortage that could force some industrial production to grind to a halt. Several German companies have announced they are cutting ties with Russia after the EU imposed sanctions on thousands of Russian individuals and businesses. Brussels plans to ban Russian oil imports from the EU as part of a sixth package of sanctions against Moscow. A similar deterioration was seen in the trade balance of the eurozone as a whole, which had a goods trade deficit of 32.4 billion euros in April, a reversal from a surplus of 14.9 billion euros a year earlier. Eurozone trade data for May is expected to be released on July 15.