The rise in the euro-zone’s trade surplus in May indicates that GDP growth likely accelerated in the three months to June and trade is set to continue boosting growth in the coming quarters, Jennifer McKeown, an economist at Capital Economics, said.
Official data released on July 14 showed that the seasonally adjusted trade surplus grew to EUR 19.7 billion in May from EUR 18.6 billion in April.
The increase in May was mainly driven by a 2.1 percent monthly rise in exports, which outpaced the 1.6 percent increase in imports and left the annual growth of export values at a healthy 9.4 percent, the economist observed.
Among countries, the German trade surplus climbed to EUR 20.3 billion in May from EUR 19.8 billion in April, while the French deficit narrowed from EUR 5.6 billion to EUR 4.9 billion – its smallest this year.
McKeown noted that the Eurozone trade surplus in June was still smaller than it was this time last year, partly reflecting the rise in oil prices.
“Monthly trade volumes data, which are less timely than values data, have shown annual export growth outpacing that of imports this year, in stark contrast to the situation in 2016,” the economist pointed out.
Though the monthly goods trade values data are not a great guide to the goods and services trade volumes data used to construct GDP, the latest monthly industrial production and retail sales data suggests that GDP growth may have exceeded Q1’s 0.6 percent rise in the second quarter, the economist said.
McKeown expects export growth to rise further in the coming months, with global demand in good health and the euro exchange rate still at a fairly low level by past standards.
“Net trade should therefore boost euro-zone GDP growth over the next year or so, although that support is likely to fade by 2019 as the euro appreciates and growth slows elsewhere,” McKeown predicted.
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