Energy costs push euro area into trade deficit

The euro area recorded a trade in goods deficit of €7.8 bn in May 2026, marking a significant reversal from the €15.0 bn surplus observed during the same month last year, according to Eurostat. According to the latest figures, the currency bloc’s export performance remained largely stagnant, reaching €243.6 billion, a marginal increase of 0.1 per cent compared with May 2025. The widening deficit was primarily fuelled by a surge in import costs, which rose by 10.0 per cent to reach €251.4 bn in May 2026, up from €228.5 bn a year earlier. This latest monthly figure represents a sharp deterioration of €22.8 bn compared to the position held in May 2025 and follows a smaller deficit of €1.2 bn recorded in April 2026. The downturn was primarily attributed to a widening energy deficit coupled with reduced surpluses in sectors including machinery, vehicles, and chemical products. The broader European Union mirrored this downward trend, posting a trade deficit of €12.1 bn in May 2026, compared to a surplus of €12.7 bn in May 2025. Extra-EU exports fell by 1.1 per cent to €215.7 billion, while imports grew sharply by 10.8 per cent to €227.8 bn over the same period. For the first five months of 2026, the euro area saw its trade surplus contract to €3.3 bn, a stark contrast to the €78.7 bn surplus achieved between January and May 2025. During this five-month window, euro area exports fell by 2.8 per cent, while intra-euro area trade bucked the trend by rising 3.3 per cent to €1 156.7 bn. The European Union’s performance for the January to May 2026 period showed an overall trade deficit of €15.9 bn, compared with a healthy surplus of €70.1 bn during the same timeframe in 2025. Seasonally adjusted figures for May 2026 show that the euro area balance stood at €-5.0 bn, while the EU balance was recorded at €-9.0 bn, reflecting a continued decline from April 2026 levels. Between March and May 2026, intra-EU trade expanded by 4.8 per cent, even as the bloc contended with a 10.3 per cent rise in imports from non-EU countries.