Giacomo Pongetti
- 25 April 2024
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 3, 2024Details
- Abstract
- This box investigates the drivers of the weakness in euro area imports in 2023. After rebounding in mid-2022 as a result of the easing supply bottlenecks for goods and the lifting of mobility restrictions in the aftermath of the pandemic, the euro area imports-to-GDP ratio fell in the first quarter of 2023 and has remained at a lower level since then. We show this is mainly due to the composition of GDP growth following a period characterised by weak exports and consumption. These are two of the most import-intensive components of GDP, in particular exports, owing to the downstream position of the euro area in the supply chain. Destocking also had an important role in the decline, as well as the shift in consumption from goods to services, which are less import intensive.
- JEL Code
- F14 : International Economics→Trade→Empirical Studies of Trade
E21 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Consumption, Saving, Wealth
E22 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Capital, Investment, Capacity
E32 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Business Fluctuations, Cycles
- 9 November 2023
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 7, 2023Details
- Abstract
- The decrease in euro area import prices since March 2023 has been associated with the normalisation of global supply chains amid the re-opening of the Chinese economy. Meanwhile, Chinese producer price inflation has been negative for some time, mainly driven by declining Chinese commodity prices and other China-specific factors. Lower producer prices have put downward pressure on China’s export prices and, in turn, on euro area import prices. Economic developments in China also affect euro area import prices indirectly, given China’s important role in the global demand for commodities and as a supplier of intermediate and capital goods to the rest of the world. Empirical evidence from a structural VAR analysis points to tangible spillovers to euro area import prices from Chinese demand and supply shocks, both during the surge in import prices in 2021-22 and in the subsequent plunge in 2023. The magnitude of the estimated disinflationary impact of falling Chinese producer/export prices on euro area HICP inflation is more limited, as euro area consumer price developments also depend on many other factors.
- JEL Code
- E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
F41 : International Economics→Macroeconomic Aspects of International Trade and Finance→Open Economy Macroeconomics