German exports to Russia sink to two-decade low after invasion

German exports to Russia plummeted to their lowest in almost two decades, with the fallout from President Vladimir Putin’s attack on Ukraine also contributing to a drop in overall trade.

Sales to Russia sank 63% to about 860 million euros ($905 million) in March “because of the sanctions imposed” following the invasion, “further measures to restrict exports, and unsanctioned behavior of market participants,” Germany’s statistics office said Wednesday in a statement.

Total exports fell 3.3% from the previous month.

Governments and companies are severing ties with Russia amid Western outrage at the attack and the barrage of sanctions imposed on the Kremlin and associated tycoons. Germany’s economic outlook, meanwhile, has darkened as its key manufacturing sector suffers from input shortages and record inflation as a result of the war.

“Looking ahead, despite richly filled order books, the short-term outlook for German exports doesn’t look encouraging,” said ING’s Carsten Brzeski, citing pandemic-related lockdowns in China exacerbating already existing supply-chain shortages.

“The war in Ukraine is very likely to disrupt other supply chains for good,” he said. “More generally, with a high risk that the war accelerates the trend of de-globalization and high energy and commodity prices for longer, the German export sector is facing more headwinds ahead.”