The euro zone’s monthly trade surplus rose to a record high at the start of the year thanks to a sharp drop in the price of energy imports and an uptick in exports.
The balance of trade in goods for the single-currency zone reached a surplus of €28 billion in January on a seasonally and calendar-adjusted basis, its highest level since the European Union’s statistics agency Eurostat started tracking the data in 2002.
The rebound – reflecting a similar improvement in Germany’s balance of trade – is good news for the European economy as it underlines how the huge terms-of-trade shock caused by Russia’s invasion of Ukraine is being unwound.
Last year, the euro zone recorded a trade surplus of €64 billion, a marked improvement from the record €335 billion trade deficit it suffered when natural gas and oil prices soared in 2022.
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The recent fall in oil and gas prices helped to lower euro-zone energy imports by a third in the year to January.
Claus Vistesen, an economist at consultants Pantheon Macroeconomics, said the latest data meant he now expected “a significant increase in net trade” for the euro zone in the first quarter.
But he warned that this was unlikely to last, forecasting a “slight drag on growth from net exports through 2024″. Vistesen warned the recent improvement in the euro zone’s balance of trade “doesn’t seem sustainable”, pointing out that the bloc’s trade deficit with members of the Opec oil-producing cartel had fallen to almost a three-year low of €608 million.
In January, euro-zone exports rose 2.1 per cent from the previous month, boosted by growth in shipments to most big markets, except the United States.
Imports into the bloc fell 4 per cent month on month in January, with a sharp drop in shipments from most markets including Asia, the US and members of Opec.
The bloc’s politically sensitive trade balance with China improved to a deficit of €10.6 billion in January, its lowest level for three years, due to a sharp monthly drop in shipments from China and slight growth in exports in the other direction.
However, the recent surge in imports of cheap Chinese electric vehicles has raised fears for the future of European carmakers. Brussels last year launched an anti-subsidy investigation on imported EVs from China after they increased their share of the European market from 1 per cent in 2019 to 8 per cent.
The strongest growth in EU exports over the past year was a 10 per cent rise in shipments to Japan, while those to the US increased 8.5 per cent and to the UK 2.5 per cent. But exports to China were down 3 per cent in the period.
Germany accounted for much of the euro zone’s improved balance of trade after the bloc’s biggest economy reported an overall trade surplus of €27.5 billion in January, its highest for more than six years. Its trade surplus with non-EU countries increased to €12.9 billion. – Copyright The Financial Times Limited 2024
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