Euro Zone Trade Balance Surplus Widens

The euro zone released its trade balance for the month of June showing that the trade balance surplus widened to 4.6 billion euros from the revised prior surplus of 2.1 from 1.9 billion euros while seasonally adjusted revealed that the trade gap narrowed to 1.0 billion euros from the revised prior surplus of 1.1 from 0.8 billion euros while the markets were projected a trade surplus of 1.3 billion euros.

Taking the data in details we saw that exports totaled 106.1 billion euros which is 22% lower from June of last year while imports were 101.5 billion euros a 26% decline also from the prior year, yet the trade gap was boosted from exports standing at 98.6 billion euros and imports totaling 96.5 billion euros.

Although the trade gap surplus widened but not from higher exports but as a result of lower imports and weaker level of exports as the recession still remains a major factor that is weighing on demand especially as unemployment in the 16-nation region continues to rise as it currently stands at 9.4 percent.

Since we are used to seeing a widened trade surplus positively impact gross domestic product especially as the euro zone economic growth in the second quarter contracted by 0.1 percent from the prior quarter contraction of 2.5 percent the worst since 1995, yet since trading remains weak this will continue to weigh on the outlook.

The rising unemployment rates around the world weighs on consumers' spending especially as it leaves them pocket squeezed therefore this undermines growth prospects while the zone depends heavily on exports for economic growth.