Compared to figures taken in 2014, the Eurozone’s trade surplus was much wider this January. According to the EU statistics agency, on March 18, the 19 countries that use the euro had a surplus in their trade with goods with the rest of the world of 7.9 billion euros, or $8.38 billion, which is up 100 euros from January 2014. This widening gap was said to be due to a 6% decline in imports, which likely reflects the drop in oil prices. During this time, experts noted that overall exports increased, but at a very slow rate.
Unadjusted imports fell to 140.3 euros in January. Exports were expected to have a 15 million euro surplus, but at 148.2 euros, the surplus was only about 7.9 billion euros. While imports did decline, exports remained constant which is what likely increased the trade surplus. The unadjusted balance was mainly due to a plunge in the cost of energy imports. The EU deficit in energy trade fell from 32.6 to 20 billion euros, and its deficit with its largest energy supplier, Russia, almost halved to 5.4 billion euros.
Since May 2014, the euro has been depreciating against the U.S. dollar, and this decline has continued into this year resulting from the quantitative easing measures imposed by the European Central Bank. Quantitative easing involves the purchase of mostly government bonds using freshly created money in order to increase the overall supply of euros, and thus lower their value on currency markets. Although policymakers claim that a weaker exchange rate is not their ultimate goal, they are dependent upon the euro’s slide against the dollar to further increase exports and foster economic growth. Still, there is currently no evidence that the boost will alleviate the problem.
Industrial production fell in January, and recently released trade figures suggest that manufacturers have not yet benefited from new overseas orders. However, investment may be continuing to revive. From January to December, construction activity increased by 1.9%, resulting in the largest month-to-month rise in the industry since the end of 2013. During the last quarter of 2014, the rise in investment helped to increase economic growth. This increase in construction activity may suggest that growth has continued into 2015.