Soaring energy prices have taken a toll on the eurozone economy, combining with a jump in Chinese imports to drive the bloc’s trade deficit in goods to a 13-year high in December.
Imports of goods into the eurozone rose 36.7 per cent in value in December, compared with the same month a year earlier, mainly driven by higher energy prices, Eurostat said on Tuesday. The eurozone relies on imports for most of its oil and gas supplies. The value of goods exports from the bloc rose 14.1 per cent over the same period.
Its monthly trade balance was also hit by a 53 per cent year-on-year rise in imports from China. As a result, the 19-country single currency bloc’s seasonally adjusted trade deficit in goods rose to €9.7bn in the final month of last year, its highest level since August 2008.
Over the whole of last year, the bloc’s long-running trade surplus with the rest of the world fell to €128.4bn, down 45 per cent from the previous year.
“The eurozone trade surplus has suffered a violent reversal in the past six months,” said Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics. “Higher costs of energy imports are part of the explanation, but the driver is a blowout deficit with China.”
Figures for the EU showed an even larger seasonally adjusted trade deficit in goods of €17.2bn in December. For the full year, the EU increased its trade surplus in goods slightly with the US and the UK, but this was more than offset by its equivalent deficit with China widening 36 per cent from 2020 to €248.9bn.
Trade between the EU and UK continued to show signs of disruption after the Brexit transition period expired at the end of 2020, leading to the introduction of tariffs on many goods traded between the two for the first time last year.
EU goods exports to the UK rose 1.9 per cent last year — significantly smaller than increases to its other main trading partners — but EU imports of goods from the UK fell 13.6 per cent, in contrast to increased imports from most other countries.
Eurostat said Brexit meant “data on trade with the UK are not fully comparable with data on trade with other extra-EU trade partners, and for reference periods before and after the end of 2020”.
Europe’s heavy reliance on Russia, which supplies about 40 per cent of the EU’s natural gas imports and a third of its crude oil imports, has been exposed in recent months by the tensions over Ukraine that have driven up energy prices.
The value of EU imports from Russia rose two-thirds last year, more than quadrupling the EU’s trade deficit in goods with Russia to €69.2bn.
Separately, the European Central Bank on Tuesday published estimates showing that if natural gas prices remained high it would reduce gross domestic product in the euro area by 0.2 per cent this year.
A “gas rationing shock”, where supplies to eurozone companies fell 10 per cent, would lower GDP by 0.7 per cent, the ECB added.