The euro zone’s loss of cost competitiveness since 2019

The euro zone's cost competitiveness has declined since 2019, particularly in relation to that of the United States, for two reasons: The fall in productivity gains and the significant hiring difficulties have led to a greater rise in unit labour costs in the euro zone than in the United States; Since 2022 and the start of the war in Ukraine, energy prices have risen more in the euro zone than in the United States. Overall, the euro-zone economy lost 8. 5 % of its cost competitiveness to the US economy between 2019 and 2023. The dollar/euro exchange rate shows a 7% depreciation of the euro between 2019 and 2023 . This leaves only a 1. 5 % loss of competitiveness for the euro zone compared with the United States. Is the euro zone's loss of competitiveness reflected in changes in export market shares or manufacturing production? The answer is yes, with euro-zone exports and industrial production falling relative to those of the United States from 2022 onwards.