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Signs of recession increase after eurozone exports decline in July
Source: Bloomberg News |
September 18, 2012, Tuesday
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Print Edition
Print Edition
EUROZONE exports declined in July, adding to signs of a recession after the economy contracted in the second quarter.
Exports from the 17-nation region fell a seasonally adjusted 2 percent from June, when they gained 2.4 percent, the European Union's statistics office in Luxembourg said yesterday. Imports slipped 1.2 percent and the trade surplus narrowed to 7.9 billion euros (US$10.3 billion) from 9.3 billion euros.
European companies have seen waning demand as governments cut spending to plug budget gaps and the global economy shows signs of cooling. In the US, industrial output unexpectedly fell in August by the most since March 2009. The European Central Bank cut its economic projections for this year and next on September 6 and reiterated its pledge to buy government bonds along with the region's rescue fund to help counter the region's fiscal crisis.
"Slower global growth is increasingly weighing down on foreign demand," said Howard Archer, chief European economist at IHS Global Insight in London. "This reinforces the belief that the eurozone is headed for further gross domestic product contraction in the third quarter given that growing exports was one of the few positives" in the first half.
German exports dropped 4.2 percent in July from the previous month, while Italy's fell 4.5 percent, yesterday's report showed. In France, shipments fell 0.2 percent. Greece had a drop of 7 percent, while Spain and Portugal reported gains of 1.4 percent. Irish exports rose 1.5 percent from the previous month.
With companies seeking ways to lower costs and global demand faltering, the euro-area economy will shrink 0.2 percent this quarter after a similar contraction in the previous three months, according to the median of 21 economists' forecasts in a Bloomberg News survey. Economic confidence fell in August and manufacturing and service industries shrank. Unemployment held at a record high of 11.3 percent in July.
The economy may shrink 0.4 percent this year instead of a previously projected 0.1 percent, the ECB said. In 2013, GDP will probably rise 0.5 percent, half the pace projected in June, it forecast.
Exports from the 17-nation region fell a seasonally adjusted 2 percent from June, when they gained 2.4 percent, the European Union's statistics office in Luxembourg said yesterday. Imports slipped 1.2 percent and the trade surplus narrowed to 7.9 billion euros (US$10.3 billion) from 9.3 billion euros.
European companies have seen waning demand as governments cut spending to plug budget gaps and the global economy shows signs of cooling. In the US, industrial output unexpectedly fell in August by the most since March 2009. The European Central Bank cut its economic projections for this year and next on September 6 and reiterated its pledge to buy government bonds along with the region's rescue fund to help counter the region's fiscal crisis.
"Slower global growth is increasingly weighing down on foreign demand," said Howard Archer, chief European economist at IHS Global Insight in London. "This reinforces the belief that the eurozone is headed for further gross domestic product contraction in the third quarter given that growing exports was one of the few positives" in the first half.
German exports dropped 4.2 percent in July from the previous month, while Italy's fell 4.5 percent, yesterday's report showed. In France, shipments fell 0.2 percent. Greece had a drop of 7 percent, while Spain and Portugal reported gains of 1.4 percent. Irish exports rose 1.5 percent from the previous month.
With companies seeking ways to lower costs and global demand faltering, the euro-area economy will shrink 0.2 percent this quarter after a similar contraction in the previous three months, according to the median of 21 economists' forecasts in a Bloomberg News survey. Economic confidence fell in August and manufacturing and service industries shrank. Unemployment held at a record high of 11.3 percent in July.
The economy may shrink 0.4 percent this year instead of a previously projected 0.1 percent, the ECB said. In 2013, GDP will probably rise 0.5 percent, half the pace projected in June, it forecast.
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