Falling growth: trade turnover between Russia and Germany has fallen by 82% in three years

The volume of trade between Russia and Germany has fallen by 82% since 2021 and by 30% since 2023, Izvestia has found out. From January to October last year it amounted to $8.6 billion, the German Embassy in Moscow specified. Although at the beginning of the year Germany remained Russia's main trade partner in the EU. Nevertheless, Berlin intends to continue the sanctions course against Russia, German diplomats claim. Although there is growing dissatisfaction with the economic policy of the authorities in Germany, thousands of entrepreneurs have come out to protest. The country's GDP has been falling for two years in a row. Whether the current economic situation will affect the upcoming elections to the Bundestag and whether there are prospects for resuming the previous level of cooperation between Moscow and Berlin - in the material of "Izvestia".

Trade collapse

The once prosperous economic partnership between Russia and Germany, which for a long time was the cornerstone of European trade, is suffering a historic collapse. The trade turnover between Russia and Germany from January to October 2024 amounted to about $8.6 billion (data for the last two months of last year are not yet available), the German embassy in Moscow told Izvestia. It noted that the volume of trade continues to decline. "Izvestia" analyzed UN data for the same period in 2021, 2022 and 2023 and found out that trade turnover between the countries for three years has decreased by more than 82%. In the 10-month period of 2021 it amounted to $48.6 billion. In the same period of 2022 - already $41 billion, a decrease of more than 15%. The year 2023 was marked by a sharp collapse in trade relations - by 70%, to $12.3 billion. Comparing the period from January to October 2023 and 2024, the negative trend continued, and the decline amounted to 30%. If a full year is taken into account, the percentages are not much different.

Until 2022, Germany was Russia's main trading partner in the EU, and the Russian Federation was a key supplier of energy resources for German industry. In the past, the basis of trade turnover was Russian exports of gas, oil, metals and fertilizers, and German exports of various machinery, equipment, cars, chemical products and pharmaceuticals. However, after the start of Russia's special operation in Ukraine and the imposition of EU sanctions, including an embargo on Russian energy and a ban on exports of high-tech products to Russia, trade began to decline rapidly.

The share of Russian natural gas in Germany's consumption mix fell to about 20 percent in 2022, down from 55 percent in 2021. Russian natural gas is now not supplied to Europe, and to Germany in particular. However, large-scale deliveries of Russian liquefied natural gas (LNG) continue. The current situation around energy carriers is connected with two key factors: severe EU sanctions pressure and the disabling by sabotage of two strings of Nord Stream-1 and one string of Nord Stream-2 on September 26, 2022. Germany has predominantly refocused on LNG from the US and Qatar. One way or another, Berlin continues to play a central role in LNG imports from Russia. According to the European Commission, the EU imported 20 billion cubic meters of Russian LNG in 2024, up from 18 billion the previous year.

Impact of reduced trade relations with Russia on the German economy

The ban on supplies of high-tech goods (semiconductors, machine tools, electronics) to Russia and Russia's retaliatory restrictions on exports of rare metals have hit Germany's machine-building sector. For example, exports of automobiles from Germany to Russia decreased by 98%. The closure of EU borders to Russian trucks, the withdrawal of Western companies from Russia (e.g., Siemens and BASF) and the severing of financial ties (disconnection of Russian banks from SWIFT) made trade almost impossible. Moscow has reoriented energy exports to Asia (e.g. China and India) and increased imports of goods from Turkey, the UAE and Kazakhstan. The EU's share of Russian foreign trade has fallen from 35% in 2021 to 8% in 2023.

Germany continues its tough sanctions course against Russia, supporting all initiatives of the European Union, sometimes being the driving force behind these ideas. The EU has already introduced 15 packages of sanctions, and there are no prospects of changing this trend. "Germany has supported and continues to support this policy," the German embassy in Russia told Izvestia.

The German economy has also been affected by the sanctions policy. For two years in a row, the country has seen its GDP shrink (-0.3% in 2023 and -0.1% in 2024), a trend not seen since the 2008 financial crisis. Industrial production is down 1.5% year-over-year and inflation remains at a high 5.9%. Energy-intensive industries such as steel and glass have cut production or moved overseas, adding to unemployment fears. Moreover, German businesses are actively relocating to the U.S. due to a lack of production capacity and U.S. subsidies.

The rupture of economic ties between Moscow and Berlin, of course, affects the German economy, but the peak was in 2022-2023, when the refusal of Russian energy resources inflated energy prices inside Germany and caused quite high inflation, said Sergei Shein, a senior researcher at the Central Committee of the National Research University Higher School of Economics.

- I think that the peak has passed, as the EU as a whole and Germany in particular are trying to adapt to the current realities and the gradual rejection of cheap Russian energy carriers. So the situation here for Germany is leveling off. Of course, there were shocks, and they caused certain social discontent, but it is not necessarily connected with the public demands to change the foreign policy course of the FRG towards Russia," Sergey Shein told Izvestia.

Political situation in Germany

The difficult economic situation has undermined public confidence in the coalition government of Chancellor Olaf Scholz. According to ARD polls, 64% of Germans believe that it is not coping well with the crisis. Against this background, the popularity of the center-right CDU/CSU bloc and the right-wing Alternative for Germany (AdG), which advocates constructive dialogue with Russia, is growing.

A month before the Bundestag elections, 30% of respondents are ready to vote for the CDU/CSU. The rating of the ruling Social Democratic Party of Germany (SPD) has not changed compared to last week and remained at the level of 16%, so it is highly doubtful that in a month the SPD will be able to catch up with the conservatives, given the gap of 14 percentage points. The second place in the rating is still held by the AdG with 21%. Their rating may rise, given the strong open support from Donald Trump's team, and in particular, Ilon Musk. For the "Greens" are ready to vote 12% of the survey participants. It is worth noting that not only economic problems are driving German voters today. Support for the same AdG is also related to the migration issue.

In recent days, protest activity has also flared up in Germany: thousands of entrepreneurs came out in various German cities and called on the country's leadership to realize the scale of the crisis and take decisive measures to ensure the country's economic security. Some called for resuming normal relations with Moscow, revising the sanctions regime and stopping financial support to Kiev.

Negative trends in Germany are also affecting the European Union as a whole. Stagnation in the country's economy really means an economically weakened EU, which in the long run threatens certain troubles in terms of internal solidarity, European discontent and interstate contradictions, summarized Sergei Shein.

One should not be under any illusions that cooperation between Russia and Germany will ever reach the pre-sanctions level. Here the prospects of restoring the previous level of cooperation are minimal, based on the fact that this confrontation scenario, which was clearly chosen by the European Union after February 2022, has a strong inertia. So far, there are no signals that the sanctions pressure will decrease, but relaxations may happen. It will become clearer after the start of possible negotiations on the settlement of the Ukrainian conflict. "Turning back is very difficult in such conditions - it requires a great political will, which the EU does not have at the moment," summarized Sergei Shein.