The euro traded steadily at $1.28 on Friday morning after data on Thursday showed that the region's March trade surplus was at its highest level since 1999, when the eurozone was created. The Wall Street Journal reported that the eurozone's trade surplus increased during the first three months of 2013, which indicates that weak internal demand was responsible for the weak GDP figures reported on Wednesday. During the fourth quarter, the economy shrank by 0.2 percent, which translates to an annualized contraction of 0.9 percent.
After seeing the trade data, many are blaming weak consumer demand for the flagging GDP. The statistics agency Eurostat reported that the export of goods from the region outpaced imports by 22.9 billion euros in March, a large jump from the 6.9 billion euros reported in March 2012. The numbers imply that foreign markets make up a large portion of demand for eurozone activity.
In response to the poor GDP figures and criticism that France was losing its leadership role in the eurozone, French President Francois Hollande announced his initiative to push for an economic government within the eurozone that has its own budget, a synchronized tax system and a full time president. All of this, he said, is possible to implement within the next two years.
The new eurozone economic government would be responsible for major political and economic concerns and the actions to be taken by member states. In doing this, Hollande claims the region would have consistent fiscal and welfare policies and it would keep tax fraud from disrupting the region's economic system.
On the same day shortly before Hollande announced his intentions, German Chancellor Angela Merkel told the press she was optimistic that France would pull out of its recession by finding a balance between promoting growth and budget cuts.
Germany has already been vocal about its opposition to debt sharing among member states and even the prospect of a unified banking system created resistance from German policy makers.
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