Exports declined 2.5 percent from November, the biggest drop since October 2005, the European Union's statistics office in Luxembourg said today, pushing the euro area into its first trade deficit in 16 months.
Europe's overseas sales may cool this year as the U.S. economy teeters close to a recession, damping demand in the euro area's second-biggest market. The euro's 11 percent appreciation against the dollar and sterling in the last 12 months also is making euro-area products less competitive.
The seasonally adjusted trade deficit of 2.1 billion euros ($3.1 billion) in December compared with a surplus of 2 billion euros in November. While exports declined in the month, imports rose 0.7 percent. The region last reported a trade gap in August 2006, when the shortfall was 3.2 billion euros.
In the 11 months through November, exports to the U.S. declined 1 percent from the year-earlier period, while shipments to the U.K., the euro region's largest market, gained 6 percent. Exports to China jumped 12 percent and those to Russia and Poland increased 22 percent. The statistics office publishes detailed figures with a one-month lag.
Overseas sales from Germany, the euro area's biggest economy, rose 10 percent in the 11-month period, the statistics office said. French exports increased 2 percent.
For all of 2007, euro-area exports rose 8 percent, while imports gained 6 percent. The region posted a full-year trade surplus of 28.3 billion euros, compared with a 9.3 billion-euro deficit in 2006.
Europe's trade gap with China soared 23 percent to 101.5 billion euros in the January-November period as imports from the world's fourth-largest economy jumped 19 percent. That almost completely eroded the 119 billion-euro combined surplus the euro area posted with the U.S. and the U.K., its biggest trading partners.