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[Germany's Current Account Surplus Hits One-Year Low as Widening Service and Secondary Income Gap Offsets Goods Trade Resilience] ⑴ Germany's current account surplus narrowed to €10.4 billion in May, the lowest level in nearly a year. While still higher than the €5.9 billion in the same period last year, the narrowing trend has drawn market attention for several consecutive months. ⑵ The goods trade surplus remained largely stable at €15.4 billion, a slight decrease from €15.8 billion in the previous month. Exports rose 0.6% month-on-month to €112.9 billion, while imports increased 1.1% to €97.5 billion. The simultaneous expansion of imports and exports indicates a recovery in both domestic and external demand. ⑶ The core pressure on the narrowing surplus came from services trade. The services deficit widened from €5.9 billion to €7.2 billion, while the secondary income gap also increased from €1.6 billion to €3.5 billion. Together, these factors dragged down the surplus by approximately €3.2 billion compared to the previous month. ⑷ Positive changes emerged in the structure. Primary income turned from a deficit of €2.3 billion in the same period last year to a surplus of €5.7 billion, reflecting improved returns on German overseas investments, which to some extent buffered the impact of the widening service and secondary income gaps. (5) Cumulatively, Germany's current account surplus for the first five months of 2026 is €88.7 billion, a slight decrease from €90 billion in the same period last year. If the service deficit continues to widen, the full-year surplus may be further compressed. (6) The narrowing trend of the current account surplus has a neutral impact on the euro exchange rate. The market is more concerned about the changes in Germany's external balance as a core economy in the Eurozone. If import growth continues to exceed export growth, it may alleviate, to some extent, the internal Eurozone pressure regarding Germany's long-term trade surplus.