The euro zone unexpectedly swung to a trade deficit in March from a surplus in February as the value of exports shrank and imports increased amid a strengthening euro and rising oil prices, data showed today.
The external trade gap of the 15 countries using the euro came to €2.3 billion ($3.56 billion) in March against a €0.8 billion surplus in February and a €7.5 billion surplus 12 months earlier, the European Union's statistics office said.
Euro zone gross domestic product grew by 0.7 per cent quarter-on-quarter in the January-March period, a Eurostat estimate showed last night, but economists expect a sharp slowdown in the second quarter.
The euro jumped from $1.52 at the start of March to $1.57 by the end, continuing months of steady appreciation that triggered complaints from European exporters that the exchange rate had crossed the pain threshold already at $1.50.
But some economists said it was the speed of change in the euro's exchange rate, rather than its strength, that did the damage.
Eurostat said that according to seasonally unadjusted data, exports fell 1 per cent year-on-year in March while imports rose 7 per cent.
Seasonally adjusted, the euro zone deficit in March was an even higher €2.4 billion against a surplus of €1.6 billion the previous month as exports fell 2.9 per cent month-on-month and imports remained unchanged.
Detailed data for March was not yet available, but a breakdown showed the trade deficit in energy widened to €49.1 billion in the first two months of 2008 from 36 billion in the same period of 2007.
"Given that oil imports are likely to have risen in March due to record high prices, the fact that euro zone imports were only flat hints at softer domestic demand," said Howard Archer, economist at Global Insight.