Tags: Eurozone | Exports | trade | germany

Eurozone Exports Surge but Demand at Home Still Weak

Monday, 16 April 2012 09:45 AM

The eurozone's trade with the rest of the world showed surprising strength in February, driven by French and German exports of cars and machinery, but imports remained weak as European households struggled through the bloc's economic slump.

Exports from the 17 countries sharing the euro surged 11 percent to give a trade surplus of 2.8 billion euros, from a deficit of 2.8 billion euros in February 2011, the EU's statistics office Eurostat said on Monday.

Foreign demand for the eurozone's goods offer the bloc its best chance of pulling out of recession this year, economists say, as rising unemployment and the impact of the public debt crisis sap business confidence and bank credit at home.

Imports rose 7 percent in February, mainly due to demand for Russian oil and gas during a sharp cold snap in February.

Adjusted for seasonal swings, the eurozone posted a trade surplus of 3.7 billion euros in February, continuing a trend in positive territory.

The eurozone's economy is expected to shrink about 0.3 percent this year, its second recession in just three years, but the slump masks wide divergences in the bloc's fortunes, with Germany and France likely to escape recession.

Economists are divided over just how deep the recession will be across the currency area, but most point to a pick-up later this year, driven by Chinese and U.S. demand for Europe's goods.

"In the eurozone, the balance of growth-related data continues to support our better-than-consensus picture of flattish gross domestic product growth during the first half, although one of significant divergence," Erik Nielsen, Unicredit's global chief economist, said in a note to clients.

"German growth remains robust, while peripheral GDP continues to contract," he said.

In January, the latest month for which data was available on a country-wide basis, exports of goods from France and Germany both rose 9 percent although German strength was the most notable as the eurozone's top economy was one of the few to notch up a trade surplus in the first month of the year.

Greece and Portugal, already in recession and only saved from insolvency by emergency eurozone funding, had trade deficits in January. Italy's deficit was one of the largest in the bloc, at 4.3 billion euros, although separate data showed it narrowed in February.

Overall in January, German strength helped increase exports to China by 16 percent and by 14 percent to the United States, compared to the same month a year ago.

The eurozone's trade deficit with China narrowed slightly to 14.7 billion in January and was almost unchanged with Russia. The bloc's surplus with the United States widened to 5.9 billion euros in the month.

© 2018 Thomson/Reuters. All rights reserved.

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Monday, 16 April 2012 09:45 AM
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