Eurozone goods trade records biggest fall since Great Recession | Economy

Slowdown of trade, especially within community boundaries. According to the latest Eurostat data, in the first quarter of the year, trade in goods between eurozone countries recorded its biggest fall since the Great Recession – 8.4%. You’d have to go back to 2009, when the economy was already fully aware of the disaster caused by the financial crisis, to find an even bigger setback earlier in the year. That depletion was also reflected in national performance: Spain’s exports fell 9% between January and March, halting an upward trend that had begun since the pandemic and widening the trade deficit.

What are the reasons for this noticeable decline? There are several signs that the economic downturn in Europe is affecting trade. The eurozone entered a technical recession at the end of 2023 after two consecutive negative quarters, with Europe’s powerhouse Germany leading the decline among the single currency’s major markets – Spain, on the other hand, declined. against the tide and retained its strength.

Activity resumed growth earlier this year, increasing by 0.3% between January and March in both the euro area and the EU as a whole. Once again, Berlin changed the situation and surprised with GDP growth of 0.2%, which predicts an improvement in the cycle, the consolidation of which will have to be postponed. “We’ll see if Germany’s nascent recovery helps boost goods exports. If this were not the case, we would be faced with early signs of a loss of industrial competitiveness,” predicts Raymond Torres, director of the economic situation at the Funcas think tank and associate professor at the Instituto de Empresa.

Preliminary data from the local statistics office released on Tuesday was still not enough to confirm an improvement in the situation. On the contrary: trade in goods between European partners, amounting to 650.770 million euros between January and March, was 8.4% lower than in the same period of the previous year, when it significantly exceeded 710 billion. The downward change represents the first decline in the first quarter of the year since 2020. At a time when the pandemic had not yet spread in full force, exchanges fell by 4%. Only in 2009 was the quarterly decline more pronounced than at the beginning of 2024, amounting to more than 20%.

Although exports of goods from the eurozone to non-EU markets were also less affected. In January-March they decreased by 3.2% (704.959 million euros). As with domestic trading, you’ll have to dig deeper into the statistical series to find a bigger decline and reach back to 2009, when the decline was 20.9%. However, the weakness of imports during the same period (647.5 billion, down 12.3%) acted as a balm, allowing us to achieve a positive balance. Early estimates of the eurozone’s balance sheet show a goods trade surplus with the rest of the world of about $57.5 billion. That is, in the first quarter of 2024, exports exceeded imports in value. A year earlier it was the other way around, with a deficit of about 9.4 billion.

The results of the European Union as a whole are in the same range. From January to March, goods exports outside the single market accounted for about 628.8 billion euros, down 3.3% on the same period last year, but imports fell even further: 13.4%, to 580 billion euros. As a result, the EU also recorded a surplus of €48.7 billion, compared with a deficit of €19.2 billion in 2023.

Spain trade deficit

Spain, on the other hand, had a negative balance of trade in goods with the rest of the world at 8.105 million euros in the first quarter, a deficit even higher than a year ago (6.578 million, according to preliminary data). This is the result of a 9% fall in exports to 93.429 million euros, also in this case the most noticeable since the financial crash, and a smaller decline in imports of 7.1% to 101.534 million. According to the Ministry of Economy, Trade and Business, which has just published its report Monthly foreign trade report Compared to March, the main reason is the reduction in the non-energy surplus, which fell from 1639.3 million to 8.8 million. Food, beverages and tobacco, capital goods, chemicals and the automotive sector were the categories that grew the most in sales. The largest contributors were the pharmaceuticals, petroleum and its derivatives, and organic chemicals sectors.

In March, exports to other European countries accounted for the bulk of trade turnover – 62.9% of the total. But, as Eurostat data shows, they have lost steam: the year-on-year decline was 19.3% compared to the same month in 2023. Volumes destined for the eurozone fell by 20.2%, while sales destined for non-Community markets fell by 19.1%. year on year, with record results for the month in some markets: Turkey, Mexico and India outside the EU, and Romania, Greece and Latvia in the single market.

In its report, the ministry claims that the decline in exports for the quarter was influenced by the calendar effect, and without taking it into account, the decline in exports will remain at less than half. “This may be the influence of Easter, which fell in March this year, and so we will have to wait for April data to fully assess the situation. But I feel that the export of goods is losing ground. At the moment, this is offset by weak imports and growth in the services sector. Exports of services, both tourism and non-tourism, continue to grow, supporting the external surplus,” says Torres. “This does not mean that trade in goods is going smoothly, especially with the EU, where there is a sharp decline,” he concludes.

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