Germany’s trade surplus disappears!

In May, for the first time in more than three decades, Germany’s storied trade surplus disappeared. Not only is imported natural gas more expensive, but demand in China is falling — neither of which is good news for Germany. Nevertheless, the fallout will be more manageable than many people expect, the Germans included.
For decades there has been too much emphasis on the importance of the German trade surplus to the country’s prosperity. No one claims to believe in the doctrines of mercantilism anymore, yet they reemerge time and again. To the extent Germany has been a wealthy nation, it is due to its productivity and human capital — not any pattern of trade surplus or deficit.
For purposes of contrast, Australia ran a trade deficit for decades, from 1975 to 2019. During those same years, it evolved into one of the finest places to live in the world. The most helpful way to think of a trade surplus is as concomitant of a relatively high savings rate, as for instance more spending on foreign goods eventually will turn a trade surplus into a deficit, as has happened with Germany. But a high savings rate isn’t appropriate for every nation at every point in time. Sometimes a country needs to dip into its reserves, as Germany is now doing to meet its energy needs. Losing the trade surplus has no special meaning beyond illustrating Germany’s need to pay more for natural gas.
During the 2011-2012 euro crisis, many commentators viewed the German trade surplus as a virtually automatic source of stable automatic demand, ensuring high employment.

—Bloomberg