(RTTNews) - Eurozone trade balance swung back to a deficit in November as exports dropped sharply due to the global economic crisis, official data showed Friday.
Eurostat said the unadjusted trade balance was a deficit of EUR 7 billion in November. This follows a EUR 0.5 billion surplus in October which was revised from a EUR 0.9 billion surplus reported initially. Exports slumped 10% year-on-year, while imports fell 4%.
The trade deficit in November came as a surprise, as economists were looking for a surplus of EUR 1 billion. A year ago, the trade balance showed a surplus of EUR 2.3 billion in the same month.
After adjusting for seasonal variations, the trade deficit widened to EUR 4.9 billion in November from October's revised deficit of EUR 2.1 billion. Exports fell 4.7% month-on-month, marking the biggest decline since June 2000.
Slowing economic activities forced the European Central Bank to lower its interest rate by a cumulative 225 basis points since October. Thursday, the central bank reduced its benchmark interest rate by 50 basis points to 2% in its first Governing Council meeting.
In his post decision press conference, ECB President Jean-Claude Trichet said, "We continue to see global economic weakness and very sluggish domestic demand persisting in the coming quarters as the impact of the financial tensions on activity continues."
"In the view of the Governing Council, this outlook for the economy remains surrounded by an exceptionally high degree of uncertainty. Overall, risks to economic growth remain clearly on the downside," Trichet said.
Eurozone entered its first recession since the adoption of Euro in 1999, contracting 0.2% each, in the third and the second quarters of 2008. A recent study by the Organization for Economic Co-operation and Development or OECD survey revealed that euro area economic output will decline further in the fourth quarter of 2008 and the first half of 2009 before recovering gradually. The think tank does not expect growth to move above trend rates until the latter half of 2010.
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