The Eurozone's trade deficit widened in January from December, official data showed Monday. However, compared to the previous year, the deficit shrank.

Data released by the Eurostat showed that the Eurozone recorded a trade deficit of EUR10.5 billion in January, widening sharply from a revised EUR 1.7 billion deficit in December. A year ago, the country logged a trade deficit of EUR 11.1 billion. Economists expected the trade deficit to be EUR 9 billion in January.

During the month, exports plunged an unadjusted 24% year-on-year compared to a 4% fall in December. Imports slipped 23%, after a 6% fall in the previous month.

On a seasonally adjusted basis, the trade deficit widened to EUR 5.5 billion in January from a deficit of EUR 1.7 billion in the previous month. Exports dropped 10.7% month-on-month in January, following a 2.3% fall in December. Imports were down 7.3% from a 4.8% decline in the previous month.

The Eurozone has also been hit badly in recent months by the ongoing financial crisis. In 2008, the country recorded the biggest trade deficit since the introduction of the euro about ten years back. The trade deficit stood at EUR 32.1 billion in 2008, reversing the surplus of EUR 15.8 billion in 2007. Exports grew 4%, while imports were up 7%.

During this period, exports to the U.S fell 4% annually. At the same time, the imports were up 4%. Exports to the U.K declined 4%, and imports fell 2%.

Moreover, exports to Sweden and Japan were down each 2% in 2008.On the other hand, the region recorded double-digit growth in exports to Russia and Poland. Exports to Russia grew 15% in 2008, while they were up 12% to Poland.

In the fourth quarter, the Eurozone economy contracted at the fastest pace since records began in 1995. According to flash estimates published by Eurostat, the Eurozone GDP contracted 1.5% in the fourth quarter, larger than the 0.2% decline seen in the second and third quarters of 2008.

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