Europe Economy

Euro Zone Plunges into Trade Deficit in Dec.


The euro zone swung into a trade deficit in December as the euro remained strong, with exports flat and imports growing fast, the European Union's statistics office said on Friday.

On a non-seasonally adjusted basis, the trade deficit of the then 13-country zone came to 4.2 billion euros ($6.14 billion), compared with a surplus of 2.4 billion in December 2006 and a revised 3.0 billion surplus in November 2007.

For the whole of 2007, the euro zone had a trade surplus of 28.3 billion euros compared with a deficit of 9.3 billion in 2006 as the bloc's energy bill fell somewhat while revenue from manufacturing goods increased, Eurostat said.

For December, economists polled by Reuters had on average expected a surplus of 2.4 billion euros.

Exports were unchanged year-on-year in December, while imports rose 6.0 percent.

Analysts say the strong euro and slowing domestic demand in some key euro zone markets such as the United States and Britain may be weighing increasingly on euro zone exporters.

On a seasonally adjusted basis, the euro zone trade deficit was 2.1 billion euros, compared with a surplus of 2.0 billion in November with exports falling 2.5 percent against the previous month and imports rising 0.7 percent.

More detailed data was not yet available, but January-October figures including newcomers Cyprus and Malta showed the euro zone had a 184.2 billion euro deficit in energy trade, compared with 208.1 billion in the same period of 2006.

The euro's strength against other currencies harms euro zone exports, economists say, but it shields the currency area against growing prices of oil, which is traded in U.S. dollars.

The 13-nation area's surplus in manufactured goods increased to 249.9 billion euros in January-November, compared with the like period of 2006.

The trade deficit with China soared to 101.5 billion euros in the first 11 months of last year from 82.6 billion in the same period of 2006.

The euro zone's trade deficit with Russia, its main energy supplier, fell to 26.3 billion euros from 37.6 billion.