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The euro area current account after the pandemic and energy shock

Author

Listed:
  • Emter, Lorenz
  • Fidora, Michael
  • Pastoris, Fausto
  • Schmitz, Martin
  • Niemczyk, Jerzy
  • Ryzhenkov, Mykola

Abstract

In 2022, the euro area current account balance recorded a deficit of 0.8% of euro area GDP compared with a surplus of 2.8% of GDP in 2021. This deterioration of 3.6 percentage points is the biggest annual change in the euro area current account balance on record. This article reviews developments in the current account components. It shows that most of this deterioration is expected to be temporary as it was driven by a decline in the goods trade balance on the back of sharp increases in energy import prices. The euro area current account can therefore be expected to recover, driven by a partial rebound in the terms of trade, anticipated fiscal consolidation and largely unchanged demographic factors. However, as part of the increase in energy prices will probably persist over the medium term, the euro area current account balance is likely to stay somewhat below pre-pandemic levels. JEL Classification: F32, F41

Suggested Citation

  • Emter, Lorenz & Fidora, Michael & Pastoris, Fausto & Schmitz, Martin & Niemczyk, Jerzy & Ryzhenkov, Mykola, 2023. "The euro area current account after the pandemic and energy shock," Economic Bulletin Articles, European Central Bank, vol. 6.
    • Handle: RePEc:ecb:ecbart:2023:0006:1
    Note: 491968
    as

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    File URL: https://www.ecb.europa.eu//pub/economic-bulletin/articles/2023/html/ecb.ebart202306_01~4cd4215076.en.html
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    Citations

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    Cited by:

    1. Malin Andersson & Nina Blatnik & Stephen Byrne & Lorenz Emter & Valerie Jarvis & Belén Gonzalez Pardo & Martin Schmitz & Nico Zorell & Christoph Zwick, 2024. "Intangible assets of multinational enterprises in Ireland and their impact on euro area activity," IFC Bulletins chapters, in: Bank for International Settlements (ed.), External statistics in a fragmented and uncertain world, volume 62, Bank for International Settlements.
    2. Claire Giordano & Enrico Tosti, 2024. "Weathering the storm: a characterization of the recent terms-of-trade shock in Italy," Questioni di Economia e Finanza (Occasional Papers) 831, Bank of Italy, Economic Research and International Relations Area.

    More about this item

    Keywords

    Current account; energy; investment; savings; supply chain;
    All these keywords.

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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