Germany's Economy Shows Mixed Signals as Trade Surplus Rises and Chancellor Merz's Popularity Slumps

Germany recorded a trade surplus of €19.1 billion in May 2026, up from €14.7 billion in April and beating analysts' forecasts of €14.8 billion. The surge was driven by a 23.1 % jump in exports to the United States and a 7.1 % rise in sales to China, while imports fell 2.5 % overall. For the first five months of the year, the country posted a cumulative surplus of €88.4 billion, the strongest performance in more than three years.

At the same time, the governing CDU‑CSU‑SPD coalition is negotiating a growth and employment package that includes income‑tax reforms and other measures to boost investment. Chancellor Friedrich Merz, who led the talks, saw his personal approval plunge to just 13 % of respondents expressing satisfaction, with 84 % indicating they were dissatisfied. The coalition faces pressure from industry leaders to deliver tangible economic improvements, while navigating higher energy costs and demographic challenges.

The contrasting developments highlight a German economy that benefits from strong external demand yet grapples with internal political and structural headwinds.