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Economy in Brief

The EMU Trade Surplus Shrinks 
by Robert Brusca November 16, 2007

Exports slow as imports rise.

It is too soon to chalk up the dwindling trade surplus of Europe to the high Euro, but this month’s report is another hint. The surplus is sketching out a shrinking pattern beyond the simple drop of this month's balance. And exports and imports are starting to assume the position of trade flows in transition. Exports have shed their bump up in the growth rate that may just have been a J-curve effect of the euro’s rise. Imports are rising more rapidly and that could shift if the strong euro weakens European growth. Still, the strong euro makes imports cheaper and that would account for some import rise in the aftermath of shoot up in the currency’s value even as import prices fell in domestic currency terms (euro terms).

Euro area 13-Trade Trends for Goods
  m/m% % SAAR
  Sep-07 Aug-07 3-Mo 6-Mo 12-Mo
Balance* €€ 3,905 €€ 4,511 €€ 2,957 €€ 3,195 €€ 3,080
Exports          
All Exports -0.4% 3.5% 7.3% 8.3% 6.3%
Food and Drinks -2.0% 2.4% 11.7% 8.5% 9.5%
Raw Materials 3.0% -1.6% -0.2% 9.5% 4.5%
Manufacturing -2.3% 3.0% 0.8% 4.0% 4.0%
Imports          
All Imports 0.1% 0.2% 12.2% 11.7% 5.4%
Food and Drinks 5.1% 0.7% 31.3% 22.4% 14.2%
Raw Materials -6.8% 0.8% -14.8% -2.9% 0.4%
Manufacturing -2.7% 1.1% 0.8% 2.7% 4.0%
*Million Euros; mo or period average
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