The European Central Bank published an Economic Bulletin analysis concluding that the euro area current account surplus narrowed to 1.7% of GDP in 2025 from 2.7% in 2024, with the decline driven mainly by services trade and primary income rather than goods trade. The goods surplus rose slightly to 2.3% of GDP, but this was more than offset by a shift in the primary income balance from a 0.4% surplus to a 0.3% deficit and a fall in the services surplus to 0.9% of GDP. The ECB links the change to the effects of US trade tariffs, the structure of US multinational enterprise activity in the euro area, stronger Chinese competitive pressure and rising digital and artificial intelligence-related investment. The analysis says the biggest bilateral shifts were with the United States and China. Against the United States, the euro area moved from a current account surplus of 0.1% of GDP in 2024 to a deficit of 0.4% in 2025, even as the goods surplus increased, because services and primary income deficits widened. The ECB attributes much of this pattern to euro area affiliates of US multinationals, especially in pharmaceuticals and technology, whose exports supported goods net exports while associated intellectual property charges and profit outflows increased services imports and primary income payments. Against China, the euro area current account deficit widened to 1.0% of GDP from 0.7%, mainly because of a larger goods deficit in machinery and manufactured products as Chinese import penetration increased and euro area exports lost ground in China and third markets. The ECB also says AI-related goods had only a limited direct effect on the goods balance, but higher imports of digital services and AI-enabling inputs, especially from the United States, likely added to services deficits, while stronger domestic digital investment reduced corporate net lending. The ECB expects the euro area current account surplus to remain below its 2024 level over the medium term. June 2026 Eurosystem staff projections point to a further decline to around 1.3% of GDP in 2026, partly because of higher energy import prices linked to the war in the Middle East, followed by a recovery to around 1.5% by 2028. Continued investment needs in digitalisation, AI, defence and the energy transition, together with US trade policy uncertainty and Chinese competitive pressures, are expected to keep weighing on the external balance.
European Central Bank2026-06-25
European Central Bank analyses euro area current account surplus fall to 1.7 percent of GDP in 2025 amid US tariffs MNE flows and China competition
The European Central Bank said in an Economic Bulletin analysis that the euro area current account surplus fell to 1.7% of GDP in 2025 from 2.7% in 2024, driven mainly by wider services and primary income deficits rather than weaker goods trade. It linked the change chiefly to US tariffs and US multinational structures, stronger Chinese competition and rising AI-related digital imports and investment. The ECB expects the surplus to remain below its 2024 level, falling to about 1.3% of GDP in 2026 before recovering to around 1.5% by 2028.