Euro-Area Exports Decline Most in 5 Months on Strong EuroJones Hayden
Euro-area exports declined the most in five months in December as the currency’s gains made European goods less competitive abroad, making it harder for the 17-nation economy to recover from the worst recession since 2009.
Exports dropped a seasonally adjusted 1.8 percent from November, when they rose 0.6 percent, the European Union’s statistics office in Luxembourg said today. That is the sharpest decline since July. Imports fell 3 percent and the trade surplus increased to 12 billion euros ($16 billion) from 10.5 billion euros in the previous month.
Exchange rates are at the top of the agenda for Group of 20 finance chiefs gathering today in Moscow amid growing speculation about a currency war. French President Francois Hollande last week urged coordinated government action on the euro, arguing that the currency’s 14-month peak against the U.S. dollar makes it more difficult for Europe’s recession-hit economy to recover.
The euro has gained 8.5 percent versus the dollar in the past six months and reached as high as $1.3711 on Feb. 1, the strongest since Nov. 14, 2011. The European currency traded at $1.3329 at 11:45 a.m. in Brussels, down 0.3 percent on the day.
The G-20 finance ministers and central bankers meeting in Russia are seeking to find common ground on currencies as their governments hunt for ways to boost economic growth. The recession in the euro area deepened in the fourth quarter as the economy contracted 0.6 percent, the worst performance in almost four years, data showed yesterday.
The European Central Bank forecasts the euro-area economy will shrink 0.3 percent this year and ECB President Mario Draghi said on Feb. 7 that the currency’s gains pose a risk for growth and inflation. Draghi said today in Moscow that the exchange rate plays an important role in assessing the economic outlook.
ECB council member Jens Weidmann said in a Feb. 13 interview that the currency’s gains are justified by the outlook on the economy.
“If the appreciation of the exchange rate reflects a regained confidence in the euro area and an improved growth outlook, then this is fully in line with fundamentals,” Weidmann said in the interview. “You cannot really say that the euro is seriously overvalued.”