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New Trade Data Relects European Economies’ Trends

June 6, 2011
by

At the end of May, Eurostat (the EU statistical office) released the latest data on exports and imports across the EU.  The news is mixed, as the overall trade balance in March 2011 was -€9.6 billion, compared with -€8.9 billion in March 2010 for the 27 member states.  However, within the Eurozone, there was €2.8 billion surplus in March 2011, compared with €2.7 billion in March 2010.  As usual, the numbers within the trade block are even more mixed, as many of the traditional trading powerhouses did well and others remained weak.

The below chart examines the 27 member states’ total trade (both among the EU and outside of the EU) for January and February 2011 (the most recent data).  The blue bars represent the absolute value of the trade surplus, while the red dots are the percentage change over the same period in 2010.  In both cases, the darker markers indicate that the country does not use the euro.

For the absolute value of trade, the most striking feature is that Germany has a €21.9 billion trade surplus.  This fact has cause friction among the EU countries, as many believe that Germany shrinking its surplus would help the EU and the euro overall.  In fact, Germany is the largest economy in the block, the next largest economy that has a trade surplus is the Netherlands, which the 6th largest.  Otherwise, only tiny Ireland (the 13th largest economy of the 23) has a large surplus.  Not surprisingly, the largest deficits (again in absolute terms) are the other large economies, with their deficits ranking the same as the size of their economies.

While absolute numbers are important, the change in a country’s trade balance tends to be even more important to a country’s economic growth.  In this case, it appears that being a small country in the Eurozone might be detrimental to one’s trade balance.  Of the 12 countries who have seen their trade balances become more positive compared to a year ago, seven do not use the euro.  Of the five that use the euro, one has strong ties with Germany (Austria), two are large economies (France and Italy), and the other two are Germany and the Netherlands.  Using this data, the countries who would probably benefit the most from being able to devalue their currency (Portugal, Ireland, and Greece) all saw their trade deficits increase.

This data shows the trend for the last year but the beginning of this year shows a different trend for the three Eurozone countries with the weakest economies and finances:

     EU Member States’ trade balance outside of the EU

Total Exports

Total Imports

Trade Balance

Feb 11

Mar 11

Growth

Feb. 11

Mar. 11

Growth

Feb. 11

Mar 11

Ireland

€3.4

€3.3

-1.5%

€1.4

€1.1

-19.8%

€1.9

€2.2

Greece

€0.5

€0.7

32.9%

€1.2

€1.2

-5.0%

-€0.7

-€0.4

Portugal

€0.9

€0.9

0.7%

€1.2

€1.3

2.7%

-€0.4

-€0.4

Interestingly, the country with the best numbers is Greece, as its exports grew significantly between February 2011 and March 2011, while imports declined.  Ireland saw a small reduction in its trade balance, but it was because imports have collapse, while exports also declined.  As a result, perhaps there might be hope for a Hellenic recovery soon.

 All of the trade data can be found on the EUROSTAT website:  http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/6-16052011-AP/EN/6-16052011-AP-EN.PDF

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