Morning Market Brief: August 30, 2023

Europe’s trade balance returns to surplus?

In 2022, Europe’s gas purchases were close to €400 billion, according to the International Energy Agency. This resulted in one of Europe’s largest trade deficits in the third quarter of 2022. However, the trade balance has since shifted.?

• High energy prices led to sustained high purchases of energy products. The region’s fossil fuel import requirements and the impact of the Russia-Ukraine conflict contributed to high energy costs.
• Europe experienced a record €155 billion deficit in the third quarter of 2022. This was partially due to the need to replace Russian gas supplies.
• More stable energy markets led to a recovery in the trade balance. Sales of vehicles, food and drinks increased globally, offsetting energy products.
• Europe’s trade balance moved to a surplus, ending six straight quarters of deficit. In the second quarter of 2023, Europe experienced a surplus of €1 billion, according to Eurostat. Energy product imports dropped by 15.6% in the second quarter of 2023, contributing to the trade balance recovery.

Europe’s trade balance has transformed from last year, largely due to external market forces. As the trade balance shifts, so does the financial landscape. Canada’s energy sector is also strongly influenced by international market dynamics. Although domestic wildfires and higher levels of maintenance lowered oil production in the second quarter of 2023, production is expected to increase by 8% over the next two years. Armed with economic insight and diversity in your portfolio, you’ll be well positioned to make choices that align with your financial goals.

At?CIBC Private Wealth, we aim to take a comprehensive approach to managing, building and protecting your wealth. If you'd like to discuss this market and economic update in more detail, please get in touch with your advisor any time.