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Economy in Brief

EMU Shows Withering Trade Trends
by Robert Brusca  December 20, 2011

The shorter term or ‘sequential’ trade trends are not so clear but the graph shows a clear trend in EMU exports and imports. Exports and imports have been losing broadly after seeing growth rates peak in early 2010. The deficit pattern is a picture of erratically steady deficits punctuated by a few movements into surplus that then descended back into a mire of deficits.

The pattern of trade is showing a two month episode of surplus and a recent trend that has edged toward smaller deficits. This shift might be a move that will have more lasting impact as the euro-Zone has been slowing, clearly cutting import growth, and the euro currency itself has been under pressure improving competiveness in the Zone.

Export performance is harder to pin down as the yr/yr trends have exports slowing but the sequential growth rates show that MFG export growth rates have been picking up. Even so, MFG exports fell hard in Sept but they still only half as hard as did MFG imports.

The Zone remains under pressure as ECB president Mario Draghi today warned Euro-Area members against looking for outside support saying nations needed to depend on their own plans to fix their economies He also warned that the help from the ECB would not be ‘eternal.’ Draghi seemed to offer a forecast of recession when he said that an “unavoidable” short-term economic contraction in the euro area may be mitigated by a return of confidence if governments implement budget consolidation plans. That also sounds a lot like cheering for more austerity in the face of an oncoming recession...I wonder which school of thought that odd bit of economics represents. Was Mr. Draghi taught that at MIT or is he now firmly in the German school of economics? Is it now to be austerity; everywhere, all the time?

Euro-Area Trade Trends for Goods
  M/M% % SAAR
  Oct-11 Sep-11 Aug-11 3M 6M 12M
Balance* € 300 € 2,200 € (1,000) € 500 € (833) € (1,763)
All Exp -2.0% -1.1% 4.2% 4.0% -1.5% 6.6%
Food and Drinks - -0.3% 6.2% 14.8% -2.7% 10.5%
Raw materials - 1.6% 2.2% 57.2% 19.3% 24.1%
MFG - -3.3% 6.1% 10.5% 0.6% 6.8%
All IMP -0.7% -3.2% 2.6% -5.4% -5.2% 8.4%
Food and Drinks - -0.7% 3.3% 10.3% 3.2% 11.3%
Raw materials - -1.7% 6.3% -14.6% -6.4% 10.3%
MFG - -6.6% 4.8% -11.9% -9.8% -0.5%
*Eur mlns; mo or period average; Grey shaded areas lag one month
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