Exports declined 3 percent to 194 billion euros ($305 billion) in 2007, the European Union's statistics office in Luxembourg said today. That followed an 8 percent increase in 2006 and was the first full-year decline since 2003.
The backdrop for European exports has deteriorated further this year, with the euro reaching a record against the dollar and the U.S. economy, the world's largest, teetering close to a recession. The euro's gains have prompted European Central Bank President Jean-Claude Trichet to say a number of times this month that the ECB is concerned about the currency's surge.
The euro has gained 18 percent against the dollar in the last 12 months and reached a record $1.5903 this week, making European goods less competitive overseas. As of 10:43 a.m. in Paris, the euro was up 0.8 percent at $1.5746.
That concern is shared by many of Europe's largest companies. Siemens AG Chief Executive Officer Peter Loescher said March 4 that the currency's level is ``not easy'' for the company.
A widening rate gap with the U.S. has fueled the euro's surge against the dollar. The Fed yesterday cut its benchmark lending rate by three-quarters of a percentage point to 2.25 percent, taking rate reductions since August to 3 percentage points since August. By comparison, the ECB has left its rate unchanged at a six-year high of 4 percent since June.
It isn't just against the dollar that the euro has appreciated. Measured against an index of the euro area's 24 main trading partners, it has risen around 8.5 percent in the last 12 months.