Germany's Trade Balance Improves in May: Exports to Asia and the U.S. Still below Peak Levels

Germany's trade balance increased by 1.72 billion euros in May from April. Although exports declined by 0.56 billion euros, imports declined even more--2.28 billion euros. Exports reached a peak of 80.79 billion euros in October 2006. Since then, they have tended to fluctuate narrowly around a slightly lower level. Imports show a similar pattern, as can be seen in the first chart.

Much of Germany's trade is with its European neighbors, and of its neighbors, countries in the Euro Area are Germany's major trading partners. In 2006, German exports to the Euro Area accounted for 43% of total exports and imports from the Euro Area were 39% of total imports.Trading among these countries is unaffected by changes in the value of the euro.

The rise in the euro has, no doubt, dampened the demand for German exports in countries outside the Euro Area. As can be seen in the second chart, exports to the non Euro Area fell sharply last fall. Since then, exports to the Non Euro Area of Europe have recovered more quickly than those to Asia and the United States. Data on trade by county are only available through April.