Russian energy and Chinese materials drive $11 billion trade deficit in EU

(CN) — Imported energy and raw materials, as well as trade with China and Russia, drove the European Union’s 10 billion euro ($11.3 billion) trade deficit last year, according to data published by the EU's statistics agency Eurostat on Tuesday.

While EU exports to China grew 10% between 2020 and 2021, the EU imported more than double what it exported from China. The trade deficit between the EU and China increased from 182.3 billion euros ($206.7 billion) in 2020 to 248.9 billion euros ($282.3 billion) in 2021.

Russia holds the EU’s second greatest trade deficit, which increased more than four times between 2020 and 2021, from 15.7 billion euros ($17.8 billion) to 69.2 billion euros ($78.5 billion).

The EU imports more than a quarter its crude oil from Russia, along with 46% of solid fuel and 40% of natural gas.  

Largely driven by geopolitical tensions over Russia's possible invasion of Ukraine, costs of energy imports increased 72.1% between December 2020 and December 2021, from 221.3 billion euros ($250.9 billion) to 380.8 billion euros ($431.8 billion). Compared to the energy products it exported, the EU recorded a 276.7 billion euro ($313.8 billion) deficit in 2021.

The EU’s raw materials trade deficit increased from 26.5 billion euros ($30 billion) in 2020 to 35.2 billion euros ($39.9 billion) in 2021.

Meanwhile, the 27-member bloc recorded surpluses in food and drink trade, as well as chemicals, machinery and vehicles — a consistent trend between 2020 and 2021.

The EU holds its greatest trade surpluses with the United States and the United Kingdom. U.S. imports from Europe increased 13% between 2020 and 2021. Even as EU imports from the U.S. increased significantly, the EU recorded a trade surplus of 167.4 billion euros ($189.8 billion) over the U.S.

EU exports to the UK increased only 1.9% during 2021, while imports dropped 13.6. This gave the continent a trade surplus of 137.6 billion euros ($156 billion) with its recently departed member.

In total, extra-EU exports of goods increased from 176.1 billion euros ($199.7 billion) at the end of December 2020 to 198.2 billion euros ($224.76 billion) at the end of 2021. With EU imports up 41.8% in 2021 to 208.2 billion euros ($236.1 billion), the EU recorded a 10 billion euro ($11.3 billion) trade deficit in December 2021, compared with the 29.3 billion euro ($33.2 billion) surplus recorded in December 2020.

Meanwhile data from the fourth quarter of 2021 confirms GDP growth in Europe slowed during the winter wave of omicron infections, according to data published by Eurostat on Tuesday.

Following 2.3% growth in the third quarter of 2021, GPD growth among member states that use the euro only increased by 0.3% during the fourth quarter. The EU as a whole recorded slightly higher growth in the fourth quarter, up 0.4%, which followed slightly slower growth in the third quarter (2.2%). Overall GDP increased 5.2% across the EU throughout 2021.

Nineteen of the bloc's 27 members use the euro as currency.

Comparing the fourth quarters of 2021 and 2020, Poland and Hungary recorded the largest increases in GDP, with 7.7% and 7.1% increases, respectively. Slovakia and Germany saw the lowest year-over-year increases at about 1%. The report estimates U.S. GDP rose 5.5% during the same period, a rate similar to Austria, France and Belgium.

Member states that use the euro recorded a 4.6% increase in GDP during the fourth quarter of 2020, along with 4.8% growth in the European Union. So the EU's GDP recovered to pre-pandemic levels in 2021, a milestone economists expect each member state to reach by the end of 2022.

Between the third and fourth quarters of 2021, Hungary and Spain both recorded GDP increases of 2%, while Austria and Latvia reported the largest decreases at -2.2% and -0.1%, respectively. During the same period, U.S. GDP increased an estimated 1.7%.

These rates reported were seasonally adjusted.

The European Commission’s Winter 2022 Outlook published last week projected the bloc's GDP will rise 4% through the year, with inflation driven by supply chain bottlenecks and high energy costs alleviating by summer.

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