Worries about the Eurozone’s stuttering recovery worsened yesterday as new data showed weakening exports.
A 0.2 per cent fall in goods export values and 0.9 per cent rise in import values from June to July narrowed the bloc’s trade surplus from €2.8bn (£2.2bn) to €1.7bn.
Only economic powerhouse Germany showed signs of a widening trade surplus, suggesting the export weakness was endemic to the periphery.
The Eurozone’s shrinking trade surplus comes after a year of improving trade data, raising fears that the economy may be slipping backwards once more.
The euro tumbled in value after the European Central Bank’s (ECB) August announcement that it would undertake purchases of covered bonds and asset-backed securities.
This means exporters may have reason to be optimistic about the next few months – as the value of the euro falls, European goods and services become cheaper in terms of foreign currencies.
“Given this performance, the recent euro depreciation is a very welcome support to economic activity,” said BNP Paribas’ economist Dominique Barbet.
Bank of America Merrill Lynch has downgraded its forecast for Eurozone growth in spite of the ECB’s recent policy easing announcements.
The bank’s analysts slashed their GDP forecast for 2014 and 2015 by 0.2 percentage points to 0.8 per cent and 1.3 per cent respectively.
The downgrades reflect poor second quarter growth and geopolitical tensions between Russia and Ukraine.
The low forecasts put more pressure on the ECB to boost growth. The ECB begins its targeted long term refinancing operations this week which is designed to ease credit conditions.