Key Takeaways:
The eurozone's trade surplus evaporated in May as soaring energy import costs from Middle East supply disruptions pushed the currency bloc into its widest goods deficit in over two years.
The eurozone swung to a €7.8 billion trade deficit in May from a €15.0 billion surplus a year earlier, as energy import costs surged 41.6% amid Middle East supply disruptions, Eurostat data showed Thursday.
"The eurozone is almost 100% dependent on imports for oil-derived energy products — which is now pushing the trade balance into deficit," said Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics. "Nominal imports have now increased by more than 11% since February."
Seasonally adjusted exports rose 0.6% month on month to €255.7 billion, while imports climbed 2.8% to €260.6 billion, pushing the adjusted balance to a €5.0 billion deficit from a €0.8 billion surplus in April. The 21-nation currency area's energy deficit widened to €34.5 billion in May from €24.8 billion a year earlier, more than accounting for the overall deterioration.
The swing underscores how the Middle East conflict is reshaping trade flows for net energy importers. The European Union as a whole recorded a €12.1 billion deficit, compared with a €12.7 billion surplus in May 2025, with the chemicals trade surplus — traditionally a bright spot — shrinking to €16.6 billion from €22.9 billion.
The deterioration extended across the EU's major trading relationships. The bloc's trade surplus with the US narrowed to €7.9 billion in May from €18.4 billion a year earlier, as EU exports to the US fell 12.3% to €40.8 billion while imports from the US rose 17.1% to €32.9 billion. The deficit with China widened to €30.8 billion from €28.0 billion, with EU exports dropping 4.5% and imports rising 4.9%.
Manufactured goods, which have long underpinned Europe's trade strength, showed broad weakness. The chemicals surplus fell by €6.3 billion year on year as exports dropped 12.6% to €45.5 billion, while the machinery and vehicles surplus narrowed to €5.0 billion from €14.7 billion, as imports in that category surged 14.8%.
The energy category was the single largest contributor to the trade reversal. EU energy imports jumped 41.6% year on year to €47.7 billion in May, while energy exports rose 48.7% to €13.2 billion — a pace that reflects both higher prices and the bloc's structural dependence on foreign oil and gas. The energy deficit alone reached €34.5 billion, up from €24.8 billion in May 2025.
The January-to-May period tells a similar story. The euro area's cumulative trade surplus shrank to €3.3 billion from €78.7 billion in the same period last year, as exports fell 2.8% to €1.21 trillion while imports rose 3.4% to €1.21 trillion. Intra-euro area trade, a proxy for regional demand, rose 3.3% to €1.16 trillion.
The deteriorating trade position adds to headwinds for the eurozone economy, which is already grappling with weak industrial output and uncertainty over the European Central Bank's next policy move. Higher import costs squeeze corporate margins and consumer spending power, potentially giving the ECB reason to maintain a cautious stance on rate cuts. The next monthly trade data, due in August, will show whether the May deficit was a one-off or the start of a sustained trend as energy markets remain volatile.
This article is for informational purposes only and does not constitute investment advice.
