Eurozone recovery hopes raised by healthy export growth spurt

Tim Wallace
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EUROZONE exports rose in May, according to official data out yesterday, which could substantially reduce the depth of the recession.

Meanwhile Eurostat figures also showed inflation slowly falling in line with economists’ expectations, continuing the downward trend which led the European Central Bank to cut rates further at the start of this month.

Goods exports rose 0.3 per cent on the month while imports fell 0.9 per cent, leaving a surplus of €6.9bn (£5.4bn) with the rest of the world in May, compared with a deficit of €1.2bn in the same month of 2011.

Countries on the periphery of the currency union provided much of the lift – figures for the year to April show Greek imports fell 13 per cent while exports rose 13 per cent and Portuguese exports rose nine per cent and imports fell five per cent.

“To soften the impact of tough front-loaded austerity and reforms in the Eurozone, external demand needs to offset some of the hit to domestic demand – fortunately, the trade data for the Eurozone shows that,” said Berenberg Bank’s Christian Schulz.

“In terms of goods trade, the southern European crisis countries still have a long way to go to rebalance, but the trend is clearly positive.”

Meanwhile consumer price inflation came in at 2.4 per cent in the year to June, unchanged on the year to May.

But within that headline number energy price inflation slowed from 7.3 per cent to 6.1 per cent, food slowed from three per cent to 2.7 per cent, and alcohol and tobacco slid from 4.4 per cent to 2.6 per cent.

“For this year, we continue to expect an annual inflation rate of 2.3 per cent, which is likely to decline to two per cent in 2013,” said Fabio Fois of Barclays.