BRUSSELS, Aug 17: The eurozone posted a record surplus in the trade of goods in June, the EU said on Friday, in what analysts said was a clear sign that austerity and structural economic reforms are working.
The EU’s data agency Eurostat said the 17-nation currency area’s surplus in the trade of goods surged to 14.9 billion euros according to preliminary monthly figures, the highest since it began collating numbers in 1999.
That was up from just 200 million euros for the same month in 2011.
Exports rising by 2.4 per cent compared to May, according to seasonally adjusted figures, while imports remained stable. At the same time, the European Central Bank in Frankfurt announced that the eurozone’s current account surplus grew to 12.7 billion euros in June from 10.3 billion in May.
The current account on the balance of payments, which includes imports and exports in both, goods and services plus all other current transfers, is a closely tracked indicator of the ability of a country or area to pay its way in the world. It is crucial for the long-term confidence of investors and trading partners.
“The eurozone is on the right track,” said analyst Christian Schulz at Germany’s Berenberg Bank.“Structural reforms improve competitiveness and austerity reduces imbalances. If this process continues — and Germany and the ECB are doing their best to ensure that — the eurozone can emerge from this crisis as a much more dynamic and competitive economy.”
For the first half of the year the eurozone had a goods trade surplus of 26.6 billion euros, compared to a 23.0 billion euro deficit during the same period in 2011.
Meanwhile, the ECB data showed that over the 12 months to June, the current account showed a surplus of 49.9 billion euros, compared with a deficit of 18.8 billion euros in the corresponding period a year earlier.
“Companies have to look for foreign buyers to replace austerity-hit domestic demand and wage restraint and leaner production improve competitiveness,” Schulz underlined.
“Germany is still playing a big part. Although it has recently started losing competitiveness vis-a-vis its eurozone partners, the German economy continues to enjoy a high and still improving level of competitiveness at the global level.” In emphasising his point, he highlighted increases of 1.0 percent for Spanish exports, 4.0 per cent for Italy, 9.0 per cent for Portugal and 17.0 per cent for Greece.
Not all were as enthusiastic. London-based Capital Economics instead focused primarily on growth indications as the eurozone readies for what could be a prolonged recession.
“With global growth slowing, we don’t expect the resilience of the core’s exports to last much longer,” its economists said in a note.
Given a subdued outlook for domestic demand, it underlined: “We still see both Germany and France slipping into recession in 2013.”—AFP