The euro area's trade performance

As in the case of the US and Japan, the share of euro-area exports in total world trade has been declining since the late 1990s. The trend reflects the rapid integration of emerging economies into world trade but also euro exchange rate developments. Since 2010, the euro-areaís market share has shown signs of stabilisation, mostly due to a significant depreciation of the euro. The euro area still trades predominantly with its immediate neighbours in Europe, some of which are advanced economies engaged in protracted deleveraging processes. The crisis seems to have accelerated the pre-crisis shift towards emerging markets, where demand has proved much more resilient than in advanced economies. A strong rebound in import demand from new EU Member States should contribute to boosting euro-area exports in coming years and there is no sign that the geographical specialisation of exports will be less supportive in the euro area than in other large advanced economies such as the US or Japan. The crisis may also have a lasting legacy at the sectoral/product level. The euro area has a comparative advantage in machinery and transport, in research-intensive sectors such as pharmaceuticals and in labourintensive sectors. It also has a weaker specialisation than the US and Japan in the Information and Communication Technology (ICT) sector. The crisis seems to have triggered a move away from labourintensive sectors and to have accelerated the trend decline of the machinery and transport sector in total euroarea exports. There are concerns that it might have a persistent negative effect on that sector due to a mix of sluggish demand for investment goods and durables in a number of advanced economies engaged in lengthy deleveraging processes and increasing competitive pressures from emerging market suppliers. Deteriorations in export shares have been particularly visible in the ICT sector and, to a lesser extent, in the electrical machinery and car sectors. In contrast, exports of non-electrical machinery have been comparatively resilient to the crisis, confirming the euro-areaís traditional strength in that sub-sector.