Europe Trade Gap Stayed Close to Record

Europe's trade gap remained close to a record in September as the impact of the global financial crisis weakened orders for goods from the region's biggest trading partners.

The 15-nation euro area had a seasonally adjusted deficit of 5.7 billion euros ($7.2 billion), unchanged from the previous month and compared with a record 6.4 billion-euro gap in July, the European Union's statistics office in Luxembourg said today. The July deficit, the largest since the euro was introduced in 1999, was revised from an initially reported 6.7 billion euros.

Europe's economy slipped into a recession in the third quarter, according to figures published last week, and other major economies may not be far behind. The International Monetary Fund predicts the worst global slump in almost three decades while data today showed Japan's economy, the world's second-largest, has entered its first recession since 2001.

Today's report shows that export demand is deteriorating. In the eight months through August, exports to the U.S., the second-biggest buyer of euro-area goods, fell 5 percent from a year earlier. Sales to the U.K. were unchanged. That compares with the first half of the year, when shipments to the U.S. dropped 4 percent and those to the U.K. increased 1 percent.

The statistics office publishes detailed figures with a one-month lag. The data also show that export growth to China slowed to 12 percent in the January-August period from 15 percent in the first half. The deficit with China, the largest supplier to the euro region, was at 71 billion euros, unchanged from a year earlier. Sales growth to Russia also cooled.

The January-August figures also show that the euro region's energy deficit widened by 45 percent to 211 billion euros. Crude oil reached a record $147.27 a barrel on July 11 and energy imports soared 42 percent in the seven months. Oil has since dropped to below $60 a barrel.

Europe Trade Gap Stayed Close to Record,
11/17/2008 5:14:15 AM