German foreign trade rose to a record level in February despite the collapse in business with Russia.

Exports grew in February due to the good business with the EU countries by a seasonally and calendar adjusted 6.4 percent on the previous month to a record 124.7 billion euros, as the Federal Statistical Office announced on Monday.

Economists had expected an increase of just 1.5 percent after a 3.0 percent drop in January.

This time, imports also increased surprisingly strongly by 4.5 percent and also reached a record value of 113.1 billion euros.

However, business and economists are preparing for hard times because of the Russian invasion of Ukraine.

"The Ukraine war is a massive burden on German foreign trade," said the President of the BGA industry association, Dirk Jandura.

"The medium to long-term effects are hardly foreseeable so far." One of the biggest challenges is the dependency on Russian gas and oil.

"We don't have any supply bottlenecks yet, but the situation remains unpredictable," said Jandura.

“That hits the heart of the export economy”

The German Chamber of Industry and Commerce (DIHK) sees it similarly, which also points to the corona wave in China.

"The economic consequences of the Russian war in Ukraine and the renewed intensification of production and logistics disruptions in China are shaking world trade," said Volker Treier, head of foreign trade.

"Both are expressed in delivery procurement problems and in enormous price increases and hit the German export economy to the core."

Exports to Russia went against the trend in February by 6.3 percent compared to the previous month, imports even by 7.4 percent.

"Foreign trade with Russia was only restricted from the end of February 2022 due to Russia's attack on Ukraine and the subsequent sanctions," the Federal Office said.

The extent to which Western sanctions and other measures to restrict exports will have an effect will only become clearer from March, it said.

Experts expect strong slumps.

"The negative foreign trade data with the Russian Federation in February is probably still relatively good compared to what will be published in the coming months," said VP Bank's chief economist, Thomas Gitzel.

"Russia trade will literally collapse."

In contrast, German exports to the EU countries grew by 10.4 percent in February compared to the previous month, those to the most important trading partner China by 6.4 percent and those to the USA by 2.7 percent.

However, things are not likely to continue at this pace because the mood among German exporters plummeted after the start of the war in Ukraine on February 24: the barometer for export expectations fell to minus 2.3 points in March after it had was still at plus 17.0 points, as the Ifo Institute found out in its monthly company survey.

So far, there has only been a sharper decline at the beginning of the Corona crisis in April 2020. "Companies with economic ties to Russia in particular are much more pessimistic about the coming months," said Ifo President Clemens Fuest.

"Export growth will slow noticeably."