UPDATE: Euro-Zone Trade Balance Swings To Deficit In May
Fri, Jul 18 2008, 10:14 GMT
djnewswires.com
UPDATE: Euro-Zone Trade Balance Swings To Deficit In May
(Adds details, economist comment, background.)
By Nicholas Winning
Of DOW JONES NEWSWIRES
LONDON (Dow Jones)--The euro-zone foreign trade balance swung to a deficit in May from a surplus the previous month in a sign that the euro's strength and weakening global demand are weighing on exports, data from the European Union's Eurostat statistics agency showed Friday.
The 15 countries that share the euro recorded a trade deficit of EUR4.6 billion with the rest of the world in May. That compares with a revised EUR2.5 billion surplus in April and surplus of EUR1.4 billion in May last year.
The market was expecting a deficit of EUR0.5 billion in May, according to a Dow Jones Newswires survey of economists last week. April's surplus was revised up from EUR2.3 billion reported last month.
Non-seasonally adjusted data showed euro-zone exports grew 4% on the year to EUR128.4 billion in May, but imports increased 9% to EUR133.0 billion. Over the first five months of the year, exports rose 8% on the year, while imports increased 11%, Eurostat said.
"The double whammy of a strong euro - which makes euro-zone exports less competitive - and the sharp slowdown in the U.K. and the U.S. - two of the region's key export markets - is making life increasingly difficult for euro-zone exporters," Martin van Vliet, a European economist at ING, said in a note.
"And with high oil prices...continuing to boost the oil import bill, the euro-zone trade balance is likely to remain in deficit over the coming months," he said.
The euro has chalked up record highs against the dollar and the pound in recent months as the European Central Bank held interest rates steady for months before finally hiking them earlier this month in a bid to counter the inflationary impact of soaring oil and food prices.
The data showed the euro zone's surplus with the U.K. shrank to EUR20.1 billion in the first four months of the year from EUR20.9 billion in the corresponding period last year, while the surplus with the U.S. fell to EUR17.4 billion from EUR20.0 billion following a 3% drop in exports.
Eurostat said the euro zone's internal trade rose 3% on the year in May to EUR129.4 billion.
"Clearly the global slowdown is putting downward pressure on euro-zone exports, while the EMU activity decline is visible in imports and intra-zone trade," said BNP Paribas economist Dominique Barbet. "This factor is a more important negative factor than the euro's appreciation."
The figures also showed the euro zone's deficit with China eased slightly in the first four months of the year to EUR34.1 billion, from EUR35.4 billion in the corresponding period last year as exports soared 19%.
But the euro zone's deficit with Russia grew to EUR13.7 billion between January and April from EUR11.2 billion over the period last year as both imports and exports jumped 24% on the year.
-By Nicholas Winning, Dow Jones Newswires, +44 20 7842 9498; nick.winning@dowjones.com
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(END) Dow Jones Newswires
July 18, 2008 06:14 ET (10:14 GMT) |
