Europe recorded the biggest trade deficit in 2008 since the euro’s introduction 10 years ago as higher oil prices boosted energy costs and the global financial crisis curtailed exports.
The region’s trade deficit of €32.1bn ($40.5bn) compared with a surplus of €15.8bn in 2007, the European Union’s statistics office in Luxembourg said yesterday.
The spreading of the global recession is curbing demand for European products, adding to pressure on the economy, which shrank the most in 15 years in the fourth quarter. Volkswagen AG, Europe’s largest carmaker, said deliveries fell about 20% last month and that sales in the export markets of Brazil, Russia, India and China have been “particularly hit” by the credit freeze.
“Extremely weak global economic activity seems certain to hit eurozone exporters hard,” said Howard Archer, chief European economist at IHS Global Insight in London.
“Sharply contracting domestic demand in the UK and the US, as well as substantially slowing activ
ity in emerging Europe, is particularly bad news.”
In December, exports fell a seasonally adjusted 0.9% from November, the report showed. Imports declined 3.9% from the previous month. The deficit narrowed to €300m in December from €4bn in November.
The euro remained lower against the dollar after yesterday’s report. The currency traded at $1.2643 in early London trade, down from $1.2801 in New York on Monday.
Exports to the US, the second-biggest buyer of euro area goods, fell 5% in the 11 months through November from a year earlier. Sales to the UK, the main destination for the region’s products, dropped 3%.
Sales to China rose 10% in the 11-month period, slower than the 15% pace recorded in the first half of the year. Exports to Russia grew 16%, compared with 20% in the first half. “In past years, investments in China, India and the Middle East led to strong demand for European capital goods,” said Carsten Brzeski, an economist at ING Groep NV in Brussels. “That demand has collapsed” and “will continue in the next months if you look at the new orders.”
Daimler AG, the world’s second-biggest maker of luxury cars, reported its first quarterly loss since 2007 yesterday and said it will cut production as sales decline.
Rotterdam Port, Europe’s largest seaport, expects decline of as much an 8% in throughput this year, as demand for consumer electronics, machinery and oil products weakens.