EU economy returns to trade surplus after almost two years in deficit

The shift took place in the second quarter of this year when the bloc registered a modest surplus of €1 billion, according to a new report released by Eurostat.

Worldwide sales of EU-made chemicals, machinery, vehicles, food and drinks were the main drivers behind the upward trend and managed to offset the purchases of energy products, such as gas and oil, whose prices remain extraordinarily high as a result of Russia’s war in Ukraine.

Trade balance explains the share of exports and imports in an economy. When a country or, in this case, a group of countries exports more goods than what it imports, it has a surplus or a positive trade balance. Conversely, when it imports more than what it exports, it has a deficit or a negative trade balance.

These numbers are sometimes cited to describe the health of an economy but experts warn they are overly simplistic and fail to take into account other factors such as growth, employment or productivity. For instance, the United States, the world’s largest economy, has uninterruptedly posted a trade deficit since the 1970s.

In the case of the European Union, the bloc saw a consistent surplus across most of the 2010s, when member states turned to exports as a way out of the financial crisis. But this direction came to an abrupt end at the onset of the energy crisis.

The EU is deeply reliant on foreign producers of fossil fuels and therefore vulnerable to strong price fluctuations in the global markets. Since mid-2021, the bloc has been forced to foot a hefty bill to secure energy supplies, keep the economy running and avoid the dreaded scenario of blackouts or rationing.

According to the International Energy Agency (IEA), last year the EU paid close to €400 billion in gas purchases alone. The money was devoted to replacing Russian deliveries, which until the war were known for their low-cost value.

The shopping spree drastically upended the commercial balance and plunged the bloc into the deepest trade deficit since the introduction of the single currency. 

The trade deficit of the 27 member states reached €155 billion in the third quarter of 2022, the widest on record. After that, flows began to stabilise, as volatility and speculation on energy markets decreased.

With the EU spending less to buy gas and oil, the trade balance recovered and achieved a surplus in the second quarter of this year, when the bloc registered a 15.6% drop in the import of energy purchases as compared to the previous period.