Euro Area Faces January Trade Deficit as Cyprus Shows Strong Improvement

The euro area recorded a trade deficit of €1.9 billion in January 2026, according to data from Eurostat, while Cyprus posted a notably improved trade balance over the same period. The deficit for the euro area widened from €1.40 billion in January 2025, reflecting shifts in trade dynamics across key sectors. Exports fell to €215.30 billion in January 2026, down 7.6 percent from €232.90 billion a year earlier, while imports also declined to €217.20 billion, a drop of 7.3 percent from €234.30 billion in January 2025. The monthly balance swung sharply from a surplus of €11.20 billion in December 2025 to a deficit, largely driven by developments in the machinery and vehicles sector. The surplus in that sector plunged from €13.20 billion to €1.60 billion, underscoring its influence on overall trade performance. Year-on-year, the deterioration was also linked to a decline in the chemicals sector, where the surplus fell from €24.60 billion to €16.70 billion. Meanwhile, the energy deficit narrowed, improving from €26.20 billion in January 2025 to €19.20 billion in January 2026.

Across the wider European Union, a similar pattern emerged, with a trade deficit of €5.90 billion in January 2026, slightly higher than the €5.40 billion deficit recorded in January 2025 and sharply reversing from a €12.30 billion surplus in December 2025. EU exports dropped by 10.0 percent to €189.20 billion, while imports fell by 9.5 percent to €195.10 billion. Machinery and vehicles again played a central role, with the sector’s surplus falling from €16.20 billion to €1.70 billion month-on-month. Chemicals also recorded a decline, with the surplus decreasing from €23.00 billion to €15.40 billion year-on-year. The EU energy deficit narrowed from €29.30 billion to €21.50 billion, providing some offset to broader declines.

Despite the weaker start to 2026, both the euro area and the EU recorded annual trade surpluses in 2025, though these were lower than in 2024. The euro area surplus stood at €149.90 billion in 2025, compared with €159.00 billion in 2024, with exports rising by 2.4 percent and imports by 2.8 percent. EU trade followed a similar pattern, with a surplus of €130.00 billion in 2025, down from €140.20 billion in 2024, while exports increased by 1.9 percent and imports by 2.4 percent. Intra-euro area trade reached €2.67 trillion in 2025, up 2.0 percent, while intra-EU trade rose by 2.7 percent to €4.14 trillion.

In contrast, Cyprus recorded a sharp improvement in its trade balance in January 2026, according to data released by the Cyprus Statistical Service. The country’s trade deficit narrowed to €476.60 million from €707.50 million in January 2025. Total imports fell to €994.10 million, a decrease of 13.6 percent from €1.15 billion a year earlier. Imports from EU member states declined to €554.30 million, down from €583.00 million in January 2025, while imports from third countries dropped more sharply to €439.80 million from €568.20 million in the same month the previous year. The figures included the transfer of economic ownership of vessels valued at €79.00 million, slightly lower than €79.90 million in January 2025.

At the same time, Cyprus’ exports rose significantly to €517.50 million, a 16.6 percent increase from €443.70 million in January 2025. Exports to EU countries increased to €97.20 million, compared with €84.40 million a year earlier, while exports to third countries reached €420.30 million, up from €359.30 million. Export data also reflected a sharp rise in vessel transfers, valued at €193.50 million compared with just €11.30 million a year earlier.

Separate figures for December 2025 showed a decline in imports alongside growth in several export categories, indicating improving trade momentum. Imports fell to €1.25 billion in December 2025, compared with €1.39 billion in December 2024, a decrease of 9.9 percent. Domestic exports rose to €274.20 million from €249.70 million, an increase of 9.8 percent. Industrial exports reached €262.50 million, up from €239.00 million, and agricultural exports also increased to €10.90 million from €9.20 million. Exports of foreign products surged to €224.20 million, marking a 77.7 percent rise from €126.20 million.

For the full year 2025, mineral fuels and oils were Cyprus’ largest export category, valued at €2.33 billion. Other significant exports included halloumi cheese at €356.90 million and pharmaceutical products at €356.20 million, highlighting the country’s diverse export strengths.

By fLEXI tEAM