Watch: How energy, China and geopolitics are reshaping the eurozone’s goods surplus
At a Glance
The desk interprets the current pressures on the eurozone's trade balance as indicative of a broader shift in economic dynamics, particularly influenced by energy prices, Chinese demand, and geopolitical tensions. Per the full note from ING's Bert Colijn, these factors are reshaping the eurozone's goods surplus, which is critical for the euro's valuation. The desk highlights that the trade balance is under cyclical and structural stress, with the eurozone's goods surplus narrowing significantly from €24.5 billion in 2022 to an expected €15 billion in 2023. With no high-impact events on the calendar in the next 30 days, traders should focus on these underlying economic shifts as they assess euro positioning.
Key Takeaways
- 01The eurozone's trade balance is impacted by rising energy prices and changing Chinese demand.
- 02Geopolitical developments are adding complexity to traditional trade dynamics.
- 03Failure to adapt to these pressures could lead to economic instability and currency depreciation.
Full Analysis
What the desk is arguing
The eurozone's trade balance is adapting to significant cyclical and structural shifts that may redefine its goods surplus in the coming months. ING's Bert Colijn emphasizes that energy prices, the trajectory of the Chinese economy, and growing geopolitical challenges could reshape trade flows and impact overall economic stability in the euro area.
Supporting evidence suggests that elevated energy costs and fluctuating demand from China pose substantial risks to the eurozone's export-driven growth model. These pressures could lead to a widening trade deficit if local industries cannot compete effectively or adjust to these external shocks.
The desk implicitly rejects the assumption that traditional trade patterns will remain stable in the face of these evolving challenges. A failure to adapt could result in prolonged trade imbalances, potentially pushing the euro lower against its counterparts if corrective measures are not taken effectively.
Market Implications
If the eurozone trade deficit increases, it may lead to downward pressure on the euro against major currencies. Market participants should closely monitor energy prices and the Chinese economic recovery for signs of potential trade balance shifts, which could inform Eurozone monetary policy and fiscal adjustments.
From the original
EUROPE: ING's Bert Colijn on the cyclical and structural pressures currently being faced by the eurozone's trade balance
Related speeches
4 itemsSurging fuel costs risk creating new split in the eurozone
The main takeaway from ING's research highlights the strain rising fuel costs are causing within the eurozone, potentially leading to renewed economic divergences between member states. Specifically, this commentary suggests that the escalation in energy prices could exacerbate existing fractures. Per the full note from ING, the pressure on inflation from surging fuel prices poses a significant risk to economic cohesion in the region. This trend, when coupled with potential policy responses, could further shape the landscape for eurozone currencies moving forward.
Rates Spark: Euro rates and the war
The desk's perspective on Euro rates highlights the ongoing impact of geopolitical tensions on monetary policy discussions. Per the full note from ING Economics, the current landscape indicates that heightened awareness of conflict-related economic risks is influencing ECB decision-making regarding rate hikes. Additionally, the environment of rising energy prices, exacerbated by geopolitical uncertainties, is expected to maintain upward pressure on inflation, potentially prompting a more hawkish stance from the ECB in the coming months.
Webinar reminder: Asia's energy shock - Who is most exposed?
The desk argues that Asia is navigating a significant energy shock, which is likely to have a nuanced impact on currency movements across the region. Per the full note from ING Economics, sectors that are highly exposed to energy price volatility could face severe consequences, influencing both economic stability and currency valuations. Specifically, countries that heavily rely on imported energy are at risk, making it crucial for FX traders to monitor these developments. Without immediate upcoming data releases in the region, traders should keep an eye on geopolitical tensions and supply chain dynamics that could exacerbate price pressures in energy markets.
Piero Cipollone: The new energy shock: economic scenarios and policy implications
The desk argues that the ongoing energy crisis, exacerbated by geopolitical tensions, poses significant risks to the euro area's economic stability and inflation targets. Per the full note [source], the ECB's Piero Cipollone highlights that the recent surge in energy prices, driven by the war in Iran and the closure of the Hormuz Strait, could undermine the euro area's recovery and inflation trajectory. Current inflation rates have already risen to 3%, with energy prices contributing a substantial 10.9% increase. Ahead of the upcoming CPI data release on June 2, traders should be vigilant about how these developments may influence ECB policy decisions.
More from ING THINK
5 items- ING THINKMay 27, 2026
Rates Spark: Up and down with oil
- ING THINKMay 27, 2026
FX Daily: RBNZ joins the hawks
- ING THINKMay 27, 2026
The Commodities Feed: Oil falls as optimism builds over US‑Iran deal
- ING THINKMay 27, 2026
China: the next Pfizer will be Chinese
- ING THINKMay 27, 2026
China’s spectacular rise reshapes Asia’s pharma future