Eurozone exports hit by strong euro

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Eurozone exports are being hit by the strong euro and intense international competition, while weak domestic demand is reducing imports into the 12-country region, official figures indicated on Wednesday.

Exports fell by a seasonally-adjusted 0.4 per cent in February compared with January the third consecutive monthly fall, Eurostat, the European Union's statistical unit, reported.

However imports also fell, dropping by 0.6 per cent in February, after having been broadly flat in January. As a result, the eurozone's trade surplus remained more or less unchanged at €5.1bn, after €5bn in January.

Economists said the figures were consistent with the widely-held view that eurozone growth rebounded in the first three months of 2005 after a weak second half of 2004, but had slowed more recently.

Nicholas Garganas, Greek central bank governor, admitted in an Reuters interview on Wednesday that it was “by no means clear” when eurozone growth would recover to its trend rate. “There are no signs as yet of a strengthening in underlying growth and expansion could slow again in the second quarter, unfortunately,” he said. Mr Garganas is a member of the European Central Bank's governing council.

Further information on the strength of eurozone growth will be provided by next Monday's German business climate index, compiled by the Munich-based Ifo institute.

Meanwhile, a breakdown of eurozone trade data for January showed that UK remaining the region's largest trading partner. But eurozone exports to the US were up 12 per cent compared with January 2004, compared with an increase of just 2 per cent in exports to the UK. Exports to China were up 5 per cent but imports from China rose 23 per cent over the year.

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