The euro area current account after the pandemic and energy shock

Lorenz Emter, Michael Fidora, Fausto Pastoris, Martin Schmitz, Jerzy Niemczyk and Mykola Ryzhenkov

Economic Bulletin Articles, 2023, vol. 6

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

Keywords: Current account; energy; investment; savings; supply chain (search for similar items in EconPapers)
Date: 2023-09
Note: 491968
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