UPDATE:Euro-Zone Posts Record EUR32.1B Trade Deficit In 2008

UPDATE:Euro-Zone Posts Record EUR32.1B Trade Deficit In 2008
    (Adds details, economist comment.)     By Nicholas Winning    Of DOW JONES NEWSWIRES  

LONDON (Dow Jones)--The euro-zone trade deficit narrowed more than expected in December, but for 2008 as a whole the currency bloc posted its biggest annual deficit since records began in 1999 due to energy costs, official data showed Tuesday.

The 15 countries that made up the euro zone in December posted a combined deficit in their trade in goods of EUR0.7 billion after a revised EUR5.8 billion deficit in November and EUR3.9 billion shortfall in December 2007, European Union statistics agency Eurostat said.

Economists had been expecting a EUR6.5 billion deficit in December, according to a Dow Jones Newswire survey last week. November's deficit was revised from EUR7.0 billion reported last month.

For 2008 as a whole, the euro zone posted a record trade deficit of EUR32.1 billion, compared with a surplus of EUR15.8 billion in 2007. Exports grew 4% last year while imports increased 7%.

"Extremely weak global economic activity seems certain to hit euro-zone exporters hard over the coming months, thereby contributing significantly to the region's economic problems," Howard Archer, chief U.K. and European economist at Global Insight, said in a note.

Exports were the main driver of growth in the early part of last year but the sale of European goods abroad has suffered as many of the region's main trading partners, such as the U.K. and U.S., slipped into recession as a result of the global credit crunch.

The data showed euro-zone exports fell 2% on the year in December to EUR113.8 billion, while imports dropped 5% to EUR114.5 billion. Trade within the 15 nations that made up the euro zone at the time totaled EUR101.3 billion, 9% less than in December 2007.

From next month the data will include figures from Slovakia after it became the 16th euro-zone member at the start of this year.

Although a breakdown was only available for the first 11 months of last year, it showed the euro-zone trade surpluses with the U.K. and the U.S., its two biggest export markets, suffered as demand there waned. Exports to the U.K. were 3% weaker on the year over the first 11 months of 2008, while exports to the U.S. dropped 5%.

The euro-zone deficit with China widened to EUR108.2 billion for January to November from EUR103.3 billion in the year-earlier period. The euro zone's deficit with China remains by far the largest with any single country and is more than three times the size of the deficit with Russia - which at EUR34.3 billion is the second biggest.

The euro-zone trade deficit for energy widened to EUR282.4 billion between January and November last year from a deficit of EUR208.5 billion in the corresponding period the previous year.

That energy deficit overshadowed a larger surplus on trade in manufactured goods which grew to EUR264.5 billion in the first 11 months of last year from EUR240.5 billion in the year-earlier period.

The euro zone imports much of its oil and natural gas. Energy prices spiked higher early last year but have since fallen significantly as major economies slipped into recession.

    Eurostat Web site: www.europa.eu.int/en/comm/eurostat  

-By Nicholas Winning, Dow Jones Newswires; +44 207 842 9498; [email protected]

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(END) Dow Jones Newswires

February 17, 2009 06:11 ET (11:11 GMT)

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