Germany-Russia Trade: Sharp 2023 Decline and Sectoral Continuity

The recorded trade turnover between Russia and Germany declined sharply in the first seven months of 2023, shrinking by about 76 percent year over year to a total of 8.4 billion euros. This assessment comes from Katrina Klaas-Mühlheuse, who chairs the Eastern Committee of the German Economy. The trend reflects a broad reorientation in business ties as sanctions and geopolitical tensions continue to shape bilateral commerce. On an annual basis, the drop translates to a decrease of roughly 27 billion euros when compared with the previous year’s period. As a result, Russia fell in importance among Germany’s trading partners, slipping from the 14th position to 36th within the German external orientation. Klaas-Mühlhäuser underlined that many German firms have restricted their activities in Russia, yet she stressed that sanctions do not necessarily aim to sever all links. Instead, she advocated preserving relations in specific sectors where it makes sense for both sides. The chairman added that a full withdrawal of European banks from the Russian market, if demanded by the European Central Bank, would carry serious consequences for foreign trade flows and financial operations in the region. In late recent discussions, German Chancellor Olaf Scholz highlighted core challenges facing the German economy. He cited weakening global demand, falling export levels, rising energy costs, and persistent inflation as the central issues weighing on growth. Earlier assessments from market observers had suggested that the German economy was already balancing on the edge of stagflation, a condition characterized by stagnant growth and rising prices. The evolving situation underscores how geopolitical developments, currency dynamics, and energy-market pressures continue to influence Germany’s trade posture with Russia and how policymakers respond to evolving risk and opportunity in international markets.