Eurozone’s trade surplus falls to E3bn

Jan Strupczewski, Reuters

The non-seasonally adjusted trade surplus of the 12-nation single currency area shrank to E3 billion in February from E6.9bn a year earlier as imports grew by 9% while exports increased by only 4%, the EU’s statistics office said.

On a seasonally-adjusted basis, which gives a better picture of the trend, February imports fell 0.6% from January and exports eased 0.4%, showing the weak state of demand.

“This indicates that euro zone exports are being held back by some moderation in global growth and the strength of the euro,” said Howard Archer, economist at Global Insight.

“Imports fell by a seasonally-adjusted 0.6% month- on-month in February, suggesting that euro zone domestic demand is still relatively soft,” he said.

On a seasonally-adjusted basis, the February trade surplus was 5.1bn down from January’s E5.0bn.

The shrinking surplus was even more stark on a January-February basis with the surplus plunging by more than 80% to E1.4bn from the same 2004 period.

“The year-on-year figure has to be taken in the context of surging oil prices,” said Audrey Childe-Freeman, European economist at CIBC World Markets.

Still, the February trade surplus in the eurozone compared favourably with January’s revised deficit of E1.7bn. Economists said the trade data was unlikely to have a direct impact on monetary policy of the European Central Bank, which has kept interest rates at a historic low of 2.0% since mid-2003.

Economists said, however, that the implied weakness of domestic and external demand seen in the monthly decline of imports and exports in February would argue against any near-term interest rate rise.

The unadjusted trade deficit of the 25-member EU in February widened to 6.8bn from E3.8bn under pressure from growing deficits in trade with China and Russia.

The total growth in imports by the EU 25 was 10% in February while exports rose only 6%.

The EU-25 recorded the biggest trade gap in energy, where imports exceeded exports by E14.2bn in January 2005, up from E10.7bn 12 months earlier. But the EU exported more vehicles and machinery with the total value of the surplus in this area rising to 3.7bn in January from E2.6bn in January 2004.

Germany, Europe’s biggest exporter, recorded a 13.1bn trade surplus in January, followed by the Netherlands with a E2.4bn surplus and Ireland’s E2.3bn.

Britain had the biggest trade deficit in January at 8.5bn, followed by Spain with E5.2bn, France and Italy with E2.3bn deficits each.