Increased Trade Deficit in the Eurozone during First Half of the Year - Ascending Energy Import Costs
The Eurozone's trade balance has shown signs of improvement, despite the global increase in energy prices. Recent data indicate that the Eurozone currently has a trade surplus rather than a deficit.
In the first half of 2022, exports of goods grew by 18.7 percent to 1.39 trillion euros, outpacing the 43.0 percent increase in imports, which reached 1.53 trillion euros. This growth in exports and a slower increase in imports led to a narrower trade deficit compared to the same period last year.
However, the rise in energy prices is the main cause of the latest trade deficits in the Eurozone. Despite this, the trend suggests that the Eurozone's energy imports have declined, likely due to reduced demand or substitution effects. As a result, the increase in energy prices has not exacerbated a trade deficit, but rather has coincided with lower energy import volumes, helping shrink import values and improve the trade balance.
Further supporting this, trade imbalances globally have deepened with the EU (including the Eurozone) recording growing surpluses over the recent four quarters, contrasting with the U.S. which posted larger deficits. The European trade surplus has been supported by strong exports in the chemicals and food/drink sectors, which helped offset declines in machinery and vehicle exports.
In June 2022, the Eurozone's trade surplus with other Eurozone countries was 8.0 billion euros, while the deficit with third countries was 32.6 billion euros. This indicates that the Eurozone's trade deficit with third countries has widened significantly, with a deficit of 24.6 billion euros in June 2022, an increase of 41.8 billion euros compared to June 2021.
Overall, the Eurozone's trade balance for goods in the current year shows a deficit of 140.4 billion euros, compared to a surplus of 100.6 billion euros last year. However, the improvement in the trade balance in the first half of 2022 suggests that the Eurozone's trade deficits have not worsened recently, but have instead shown signs of improvement.
References:
[1] Eurostat. (2023). Eurostat press release: Trade in goods - June 2022. Retrieved from https://ec.europa.eu/eurostat/documents/2995521/10177726/3-23062022-AP-EN.pdf/828b39f5-b57a-48b1-b8b3-a31b5eef8896
[2] Eurostat. (2023). Eurostat press release: Trade in goods - April 2023. Retrieved from https://ec.europa.eu/eurostat/documents/2995521/10182213/3-23042023-AP-EN.pdf/6c7828c0-8c3e-4218-81f0-447807b6562c
Finance and energy sectors play crucial roles in shaping the Eurozone's trade balance, with the rise in energy prices impacting import volumes and values. The growth in exports of goods, particularly in the chemicals and food/drink sectors, has helped the Eurozone maintain a positive trade surplus, despite widening deficits with third countries in energy and other sectors.
