EU Trade Faces Consecutive Declines in Q3 2023, Maritime Activity Unscathed

Eurostat’s Insights into a Maritime of Declining Exports and Imports

In the seas of global trade, the European Union finds itself weathering the waves of diminishing imports and exports in the third quarter of 2023. Eurostat’s latest report reveals a persistent downturn, marking the third consecutive quarter of declining exports and the fourth consecutive quarter of dwindling imports.

Weathering the Storm: Quarter-on-Quarter Declines

During Q3 2023, EU exports saw a 1.2% reduction, while imports experienced a more significant contraction of 4.6% compared to the previous quarter. The result: a trade balance surplus of approximately €18 billion, a welcome shift from the deficit trend observed over the past several quarters. The last instance of such a surplus was recorded in the third quarter of 2021, totalling €6.9 billion.

Sectoral Analysis: Winners and Losers

Delving into the specifics of the import decline, the third quarter of 2023 witnessed substantial drops in other manufactured goods (-€6.6 billion), machinery and vehicles (-€6.2 billion), and energy (-€4.7 billion). On the export side, machinery and vehicles (-€6.9 billion) and other manufactured goods (-€2.7 billion) contributed to the overall decrease. However, energy and chemicals bucked the trend, experiencing increases of €3.4 billion and €3.2 billion, respectively.

Charting the Course: Visual

A visual representation of this economic ebb and flow is depicted in the accompanying bar chart and trendline, illustrating the EU’s trade balance by product group from Q1 2019 to Q3 2023 (€ billion, seasonally adjusted). The source dataset for this analysis is ext_st_eu27_2020sitc.

EU’s trade balance by product group from Q1 2019 to Q3 2023

In the third quarter of 2023, specific sectors stood out in the EU’s trade balance, showcasing surpluses and deficits. Notably, there was a trade surplus of €15.6 billion for food, drinks, and tobacco, €50.4 billion for chemicals, and €49.6 billion for machinery and vehicles. These surpluses surpassed the cumulative deficits recorded for other sectors, including -€93.9 billion for energy, -€5.9 billion for raw materials, and -€1.8 billion for other manufactured goods.

Energy’s Dramatic Arc: From Deficit to… Slightly Less Deficit

Of particular note is the energy sector’s trade deficit, which has seen a steady decline since the third quarter of 2022. From a record deficit of -€193.8 billion, it narrowed to -€93.9 billion in the third quarter of 2023. The driving force behind this downturn is the diminishing prices of energy products.

Historical Context: Contrasting Periods of Price Influence

This recent trade scenario contrasts with the period between the fourth quarter of 2021 and the first quarter of 2023. During that time, escalating prices led to a substantial trade deficit in the energy sector, overshadowing surpluses in other product groups.

As we sift through the waves of data and trends, it becomes evident that trade, much like the sea, is a realm of constant flux. In this trade saga, today, certain sectors emerge as heroes, boasting surpluses that defy the overall downward trend. The energy sector, once the protagonist in a deficit tale, is now penning a different story. The script flips, demonstrating the cyclical nature of economic narratives.

The waves may be unpredictable, but after all, in the vast expanse of economic oceans, it’s the adaptability that keeps the ship afloat. Ahoy!

Andreea Gudin