External trade

The euro area economy is relatively open, particularly when compared with other major economies, such as the United States, China, or Japan. Its trade openness has noticeably increased since 1998, primarily as a result of growing trade with new EU Member States and China. In 2012, extra-euro area imports and exports of goods accounted for almost 39% of euro area GDP, up from 25% in 1999. Yet, the euro area remains far less open than the economies of individual euro area member states.

Trade in goods accounts for about three-quarters of total euro area external trade. Comparing the sectoral composition of extra-euro area imports and exports, imports tend to have a larger share of energy and raw materials, while exports appear more heavily focused on processed goods. This reflects the international division of labour and the scarcity of raw materials in the euro area. Trade in services makes up for the remaining quarter of total trade, with a rather similar sectorial breakdown for imports and exports. The largest share is taken up by business services, followed by transportation and travel services.

External trade in goods of the euro area¹ in 2012 (share of total as a percentage)
Sources: Eurostat and ECB calculations.
Note: 1) Due to data availability the euro area still reflects the old 17 countries composition, i.e. Latvia is excluded.
  Exports Imports
Machinery and transport equipment 41.0 28.0
Other manufactured articles 23.6 22.6
Chemicals 16.6 10.5
Food, drink and tobacco 6.9 6.1
Energy 6.5 26.6
Raw materials 2.5 4.7
Other 2.9 1.6
Total 100 100
External trade in services of the euro area¹ in 2012 (share of total as a percentage)
Sources: ECB calculations.
Note: 1) Due to data availability the euro area still reflects the 17 countries composition, i.e. Latvia is excluded.
  Exports Imports
Other services 62.0 59.1
     Other business services 30.8 31.4
     Computer and information services 7.9 3.9
     Financial services 6.1 4.5
     Royalties and licence fees 5.7 9.1
     Construction services 3.6 3.9
     Communications services 3.0 1.9
     Insurance services 2.0 2.3
     Government services 1.7 0.7
     Personal, cultural and recreational services 1.2 1.5
Transportation 21.2 23.6
Travel 16.8 17.3
Total 100 100

Geographical composition of euro area trade in goods

The non-euro area EU Member States and the top 10 trading partners outside the EU together account for about three-quarters of euro area trade. Among individual countries, the United Kingdom, the United States and China are the area’s three main trading partners. Taken together, non-euro area EU Member States also represent a significant share of external trade.

Export and import shares of the euro area's¹ main trading partners (percentage points)
Source: ECB calculations are based on Eurostat trade data.
Notes: Countries are ranked according to 2008-2012 export weights. Countries listed in the table represent around three-quarters of euro area trade.
1) Due to data availability the euro area still reflects the 17 countries composition, i.e. Latvia is excluded.
  2003 - 2007 2008 - 2012
  Exports Imports Exports Imports
Non-EU trading partners 38.14 42.41 39.57 43.56
     United States 14.78 9.90 11.82 8.50
     Switzerland 5.75 4.79 6.04 4.68
     China 3.67 9.58 5.77 12.34
     Russia 3.65 6.24 4.49 7.48
     Turkey 2.72 2.10 3.00 2.00
     Japan 2.69 4.58 2.25 3.22
     India 1.21 1.14 1.67 1.53
     Brazil 1.08 1.66 1.61 1.80
     United Arab Emirates 1.26 0.34 1.46 0.32
     South Korea 1.31 2.08 1.45 1.70
EU countries 35.86 29.26 32.68 27.41
     United Kingdom 16.85 12.71 12.99 9.75
     Poland 4.03 3.03 5.13 3.93
     Czech Republic 3.23 3.21 3.64 4.12
     Sweden 3.74 3.65 3.36 3.07
     Hungary 2.45 2.40 2.25 2.34
     Denmark 2.34 2.20 2.01 1.83
     Romania 1.39 1.01 1.55 1.14
     Croatia 0.72 0.30 0.59 0.28
     Bulgaria 0.49 0.39 0.56 0.45
     Lithuania 0.36 0.23 0.36 0.33

Effective exchange rates

The nominal effective exchange rate (EER) is a weighted geometric average of the bilateral exchange rates of the euro against the currencies of a selection of trading partners.

The real EER takes into account developments in relative prices between the euro area and its trading partners. It can be calculated using one of the following deflators: consumer price indices, producer price indices, GDP deflators, and unit labour cost indices - the latter reflecting either the total economy or only the manufacturing sector. It provides a measure of the euro area’s international price and cost competitiveness.

Nominal and real EER indices are currently computed against:

  • a narrow group of 12 partner countries (EER-12),
  • a group of 20 partner countries (EER-20), comprising the EER-12 plus China and the seven non-euro area EU Member States not included in the EER-12,
  • a broad group of 39 partner countries (EER-39), encompassing the EER-20 plus 19 additional relevant trading partners (see the table below for the complete list).

The EERs are constructed using moving trade weights, computed on the basis of shares in euro area external trade in manufactured goods. The scheme combines information on imports and exports and accounts for so-called third-market effects, i.e. competition faced by euro area exporters in a partner country from exporters of a third country. The weighting schemes for the EERs are computed on the basis of trade data from the following periods: 1995-1997 for the series up to 1997; 1998-2000, 2001-2003, 2004-2006; and 2007-2009 for the series from 2007 onwards (see Box 1 in the ECB Monthly Bulletin of March 2012). Developments in the EER-20 set of indices are regularly commented in the ECB Monthly Bulletin.

Trade weights used in the calculation of the EERs of the euro (adjusted for third market effects) (2007-2009, percentage points)
Source: ECB.
EER-12 EER-21 EER-40
EER-12 100.0 63.3 51.0
Australia 1.5 0.9 0.8
Canada 2.6 1.6 1.3
Denmark 4.1 2.6 2.1
Hong Kong 2.5 1.6 1.3
Japan 11.3 7.1 5.8
Norway 2.1 1.3 1.1
Singapore 2.3 1.5 1.2
South Korea 6.2 3.9 3.1
Sweden 7.4 4.7 3.8
Switzerland 10.1 6.4 5.2
United Kingdom 23.4 14.8 11.9
United States 26.5 16.8 13.5
EER-20 36.7 29.6
Bulgaria 0.6 0.5
Croatia 0.6 0.5
Czech Republic 5.0 4.0
Hungary 3.2 2.6
Lithuania 0.5 0.4
Poland 6.2 5.0
Romania 2.0 1.6
China 18.7 15.0
EER-39 19.4
Algeria 0.4
Argentina 0.3
Brazil 1.4
Chile 0.4
Iceland 0.1
India 2.1
Indonesia 0.6
Israel 0.7
Malaysia 1.0
Mexico 1.2
Morocco 0.6
New Zealand 0.1
Philippines 0.3
Russia 3.4
South Africa 1.0
Taiwan 1.4
Thailand 1.1
Turkey 3.1
Venezuela 0.2

Background on the daily nominal effective exchange rate of the euro