Tuesday, July 24, 2012

Italy's Goods Trade Move Into Surplus

While the news from the panic stricken and erratic bond markets continues to be bad for Italy, news from trade statistics are positive. In the year to June 2012, exports to non-EU countries rose by 12.4% while imports fell by 7.1%, causing the monthly trade balance to swing from a €1.39 billion deficit to a €1.52 billion surplus.

As the balance with EU countries likely also improved and as the yearly deficit in the 12 months to May 2012 was only €850 million (It had a €27 billion deficit in the year to May 2011), this means that Italy will likely have its first goods trade surplus in a very long time.   Because Italy has small deficits in service trade, factor income and current transfers, it will still have a current account deficit, but that too is shrinking fast, falling from €5.46 billion in May 2011 to €1.2 billion in May 2012.