European Union and Eurozone trade statistics for 2018 – EU swings to a trade deficit; EU – record trade surplus with the U.S. and record trade deficit with Russia; UK had largest intra-EU trade deficit

The first estimate of Euro area or Eurozone (EA19) and European Union (EU28) trade statistics by Eurostat for 2018 reveals several interesting insights.

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European Commission (again) cuts GDP growth forecast for the European Union; Bank of England cuts UK GDP growth forecast; Germany forecast to grow slower than the UK despite Brexit

The European Commission slashed their GDP growth forecast for the European Union (excluding the United Kingdom) and the Eurozone for 2019 and 2020 citing slowing growth in China and weakening global trade.

The growth forecast for 2019 for the European Union (excluding the United Kingdom) was cut to 1.5% for 2019 (was previously forecast 2%) and for the Eurozone was cut to 1.3% (was previously forecast 1.9%).

Germany, Italy and the Netherlands all saw big downgrades for their growth outlook.

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Eurozone Q4 2018 GDP up by 0.2% and European Union Q4 2018 GDP up by 0.3%; 2018 annual GDP growth at 1.8% for the Eurozone and 1.9% for EU; Italy in Recession

Seasonally adjusted GDP rose by 0.2% in the Euro area or Eurozone (EA) and by 0.3% in the European Union (EU) during Q4 2018, compared with Q3 2018.

EU and Eurozone GDP up to Q4 2018
Source: Eurostat

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Europe’s aging population is set to cause huge economic challenges

We wrote about population percentage for each country by age last year. Here’s a map of population percentage for age 65 and above:

Japan has the highest percentage of over 65s at 26.56%. The other countries that make the top 25 countries for over 65s population are Italy, Germany, Portugal, Finland, Bulgaria, Greece, Sweden, Denmark, France, Croatia, Spain, Estonia, Austria, Malta, Lithuania, Czech Republic, Slovenia, Belgium, Netherlands, United Kingdom, Switzerland and Hungary all of which are in Europe.

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Here’s how the European Central Bank or ECB could unwind or reduce its balance sheet plus what is the new normal for the ECB?

The European Central Bank (ECB) only started its Quantitative Easing (or QE) program in March 2015 in order to fight ultralow inflation in the Eurozone (also called the Euro Area). It somewhat worked by weakening the Euro (€), increasing exports, giving the stock market a boost and drastically lowering financing costs for European governments and corporations. This caused the ECB balance sheet to soar over €4.5 trillion or 45% of Eurozone GDP.

ECB Balance Sheet until November 2018
Data Source: ECB

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Eurozone and European Union trade stats for January to September 2018; EU trade surplus with the U.S. up 18% year on year as trade deficit with Russia up 38% year on year

In January to September 2018, Euro area or Eurozone exports of goods to the rest of the world rose to €1,686.0 bn (an increase of 3.6% compared with January to September 2017), while imports rose to €1,542.9 bn (an increase of 5.8% compared with January to September 2017). As a result, the euro area recorded a surplus of €143.1 bn, compared with +€169.2 bn in January-September 2017. Intra-euro area trade rose to €1,449.8 bn in January-September 2018, up by 5.7% compared with January-September 2017.

Euro Area trade until September 2018 graph
Source: Eurostat

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Germany Q3 2018 GDP shrank 0.2% on the previous quarter (worst since 2015), did Eurozone really grow 0.2%?

The Federal Statistical Office (Destatis) reported that the German GDP shrank by 0.2% in the third quarter (vs the second quarter) of 2018. Growth was +1.1% on the same quarter a year earlier following increases of 2.3% in the second quarter (calendar adjusted: +2.0%) and 1.4% in the first quarter of 2018 (calendar adjusted: +2.1%).

German Q3 2018 GDP

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