German trade with Central and Eastern Europe at record high

German trade with Central and Eastern Europe at record high

© Reuters. FILE PHOTO: View of shipping containters at the Belgian port of Zeebrugge, Belgium February 14, 2023. REUTERS/Yves Herman/Pool

BERLIN (Reuters) – German trade with Central and Eastern Europe climbed to a new high of 562 billion euros ($597.52 billion) in 2022 despite a drastic decline in German exports to Russia, the German Eastern Business Association said on Wednesday.

German exports to Russia plummeted dramatically in 2022, as European Union sanctions targeted Moscow for the war in Ukraine and German companies stopped doing business in the country. Exports to Russia slumped by 45% year-on-year to around 15 billion euros in 2022, its lowest level in two decades, the association said.

“The disentanglement from the Russian market is progressing rapidly and will continue in 2023,” Michael Harms, managing director of the German Eastern Business Association, said at the group’s spring press conference in Berlin.

The decline in exports to Russia was more than offset by double-digit export increases to other markets in Central and Eastern Europe, Harms said.

While German trade with Ukraine, Russia and Belarus declined in 2022, the EU countries of Central and Eastern Europe gained ground. According to the estimates of the business association, Romania and Slovakia will soon pass Russia in terms of trade with Germany.

This is already the case for Poland, the Czech Republic and Hungary in terms of trade volume. Poland was Germany’s fifth-largest trading partner worldwide with sales of 168 billion euros, ahead of Italy, and the Czech Republic overtook the U.K. to join the top ten German trading partners.

As a result, the 29 countries of Central and Eastern Europe continued to contribute a good 18% of total German foreign trade, again more than China and the United States combined, according to the association.

With a decline of just 7% in 2022, trade with Ukraine has slumped less than would have been expected and has even been on the road to recovery since late fall, Harms said. German companies in the country have maintained or quickly restored production wherever possible, he said. “No relevant company has left the country,” Harms said.

While the German economy has succeeded surprisingly quickly in adapting to a world without Russian energy supplies, the Russian economy is heading into a crisis, according to the business group.

Although the Russian economy will not collapse overnight, Harms said “the sanctions, the withdrawal of foreign companies and the exodus of hundreds of thousands of young workers are having a toxic effect.”

Even when sanctions are having an eroding impact in Russia, Harms said the economy won’t collapse. “Putin will not run out of money for the war,” he said. Harms added that energy sales had ensured Russia a current account surplus of $220 billion in 2022. In 2023, it should still be $100 billion, he said.

Harms stressed that Europe also imports Russian liquefied , which is not covered by the sanctions.

($1 = 0.9406 euros)

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