ECB Economic Bulletin: Challenges to Euro Area Competitiveness Might Persist

23 September 2024

By Marta Vilar – MADRID (Econostream) – Some of the challenges facing the euro area’s external competitiveness, which have resulted in a gradual decline in its market share in global trade, might persist, according to a section of the Economic Bulletin prereleased by the European Central Bank on Monday.

‘Competitive challenges could persist as energy costs will likely remain elevated, and the euro area is still vulnerable to changes in global market conditions owing to its continued dependence on energy imports’, the ECB said.

According to the report, the euro area has gradually lost market share in global exports of manufacturing goods in the last two decades, and this weakness accelerated during the pandemic.

‘Although key markets in the euro area recovered to some extent in 2023, export performance was still rather anaemic’, it said.

An analysis cited by the report confirmed that, while pandemic-related supply bottlenecks were the main initial driver of weak export performance, energy costs and other price competitiveness factors were now the chief drag on euro area competitiveness.

‘Supply chain disruptions and losses in non-price competitiveness explain about two-thirds of the deterioration in export market shares following the outbreak of the pandemic, given the euro area’s high degree of integration in regional and global supply chain’, the ECB said.