The eurozone’s trade surplus shrank in August as the stronger euro fuelled an import boom that was only partly offset by a rise in exports, official estimates showed yesterday.
Although the euro has depreciated against the dollar from a 2017 peak in early September, it is still up more than 12% this year. Cheaper imports have complicated the ECB’s plans to raise inflation in the eurozone.
The European statistics office Eurostat said the 19-country currency bloc’s surplus in goods trade dropped to €16.1bn in August from €23.2bn in July. It was also lower than in August 2016 when it stood at €17.5bn.
The lower surplus was caused by a surge in imports from countries outside the eurozone, which grew 8.6% on the year, according to seasonally unadjusted data.
This rise outstripped the 6.8% increase in exports, resulting in a smaller surplus for the eurozone. The August surplus was the lowest recorded this year, excluding a temporary deficit in January.
The strong euro, which peaked at nearly $1.20 in August, contributed to the reduced surplus, as it made imports cheaper. This in turn capped inflation, making it harder for the ECB to tighten monetary policy.
Inflation in the eurozone was 1.5% in September, according to Eurostat preliminary estimates, the same rate as in August and below the ECB target of a rate close to 2%. The ECB is expected to extend its stimulus programme for nine months at its next meeting in 10 days time while scaling back the monthly purchases.
Meanwhile, Irish external trade figures, for August —due from the CSO this week —are set to show a slight fall in the country’s trade surplus to €3.7bn, down from just over €4.2bn for July.
However, despite uncertainty surrounding Brexit, Ireland is expected to generate another record trade surplus this year.
“Based on the very positive start to 2017, with the trade balance in the first seven months running €2.5bn above that of the same time last year, another record surplus now looks on the cards of around €48bn-€49bn,” said Alan McQuaid, chief economist with Merrion Stockbrokers.
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