Europe’s Trade Gap Narrows as Recession Curbs Imports

By Ben Sills

Dec. 18 (Bloomberg) -- Europe’s trade gap narrowed for a third month in October as the slumping economy damped imports.

The 15-nation euro area had a seasonally adjusted deficit of 1.3 billion euros ($1.9 billion), down from 4.4 billion euros in September, the European Union’s statistics office in Luxembourg said today. The deficit reached a record 6.1 billion euros in July.

Domestic demand is flagging across Europe as the economy falls deeper into a recession. Business confidence in Germany , the region’s largest economy, dropped to the lowest since 1982 in December, while euro-area unemployment rose to the highest level in 21 months in October and retail sales fell.

The euro region faces its worst slump since the Second World War next year, Julian Callow, chief European economist at Barclays Capital in London, said in an e-mailed note today. The global slowdown is curtailing orders for Europe’s exports just as the credit shortage curbs spending by companies and consumers.

Daimler AG, the world’s biggest maker of heavy trucks, said the recession may be “deep” and the European Central Bank this month delivered the biggest interest-rate cut in its 10-year history.

Euro-area imports declined to 132.1 billion euros in October, down 4.6 percent from the previous month, outpacing the 2.5 percent drop in exports. Shipments abroad from Germany grew 0.8 percent on the month, while its imports fell 0.6 percent.

Detailed Figures

The statistics office publishes detailed figures with a one- month lag. The data show that Europe’s trade deficit with China widened to a 84.2 billion euros in the first nine months of the year. Exports to China increases 12 percent to 49 billion euros, while imports from the Asian nation grew 6 percent to 133.2 billion euros.

The January-September figures also show that the euro area’s energy deficit widened to 235.5 billion euros from 164.6 billion euros in the year-earlier period. Europe’s deficit with Russia, the world second-biggest oil producer, surged 40 percent to 31.3 billion euros.

To contact the reporter on this story: Ben Sills in Madrid at bsills@bloomberg.net