Eurozone’s trade boomed in May with both exports and imports of goods to the rest of the world growing markedly, in a new sign that global commerce was in good health.
The European Union, the world’s main trader, also saw its trade increase with all its main partners, with a surge of exchanges with Russia despite economic sanctions on Moscow, Reuters reported.
The European Union statistics office Eurostat said on Friday the 19-country currency area in May exported goods worth €189.6 billion ($216.42 billion) to the rest of the world, an increase by 12.9% on the year. Imports also grew yearly by 16.4% for a total volume of €168.1 billion, according to data not adjusted for seasonal factors.
Both figures were the second highest ever-recorded for the eurozone after the peak reached in March when exports were above €200 billion and imports stood at €176 billion.
The faster growth of imports compared to exports slightly reduced the bloc’s trade surplus which stood at €21.4 billion in May, lower than the €23.4 billion surplus recorded in May 2016.
Commerce among the 19 eurozone states also increased by 15.3 in May on a yearly basis, for a volume of €162.4 billion of traded goods.
The European Union as a whole also recorded a 15.9% surge of exports to the rest of the world in May year-on-year and a 17.2% increase of imports, Eurostat said.
The 28-country bloc expanded its trade with all its main partners in the period between January and May, with exports to the United States rising on the year 6.6% and to China 20.3%, while imports increased respectively 4.0 and 6.8%.
The highest increases were recorded with Russia, which overtook Switzerland as the third main source of imports for the EU. Despite western economic sanctions imposed after Russia’s annexation of Crimea in 2014, EU exports to Russia grew 24.6% between January and May, driven by manufactured goods and machinery, while imports, composed principally of oil and gas, surged by 37.6%.
As a result, EU trade deficit with Russia expanded in May to €29.5 billion from €18.9 billion the year earlier.
Germany may be the catalyst of the eurozone’s economic recovery, but the bloc’s largest economy has not been immune to low inflation. Final consumer price index improved to 0.2% in June, compared to -0.2% in May. CPI has managed just one reading above 0.2% in 2017.
Germany’s final CPI rose 1.6% on an annual basis in June, confirming the flash estimate. The CPI had advanced 1.5% in the previous month.
The German economy will continue to enjoy solid growth in the second quarter, driven by soaring private consumption and higher construction activity while net foreign trade is unlikely to add to the expansion, the economy ministry said Thursday.
Europe’s biggest economy grew by 0.6% in the first quarter—faster than in the prior quarters—and analysts expect gross domestic product to grow at least by the same rate in the April-June period.
“The German economy is continuing its accelerated upswing—in the second quarter too,” the ministry said in its monthly report.
“German exports are currently benefitting from a revival of world trade. But they are likely to grow less sharply in adjusted terms than imports, which are also heading upwards,” the ministry added.
The ministry noted that the industry is in good shape. The government said national indicators and the global economic recovery suggest a further moderate expansion in German exports.
Despite the normalization of consumer prices, private consumption remains a reliable pillar of the economy, the ministry observed.
German and eurozone inflation levels remain well below the ECB’s target of 2%, and with no indication that inflation levels will move higher anytime soon, the cautious ECB is unlikely to taper its aggressive stimulus package.
Germany is the only country whose surplus is in double digits when measured as a proportion of its total economy. France is second placed among the major economies, with a 3% surplus, while Italy’s is at 2.5%, according to Eurostat.