The Eurozone received another bit of bad news today after it was revealed that exports out of the debt ridden region fell to the lowest level in four years, supporting concerns from some of the regions leaders that the strength of the Euro is damaging the economy.
The terrible figures come a day before the European Central Bank is due to meet for its monthly meeting to decide monetary policy.The Banks President Mario Draghi, who defiantly proclaimed that the Eurocrisis was over last year, will almost certainly be taken to task to explain just how the Euro’s strength has impacted upon the Eurozone economy.
According to Eurostat, exports out of the region fell by 0.9% in the fourth quarter of 2012, a sharp reversal of fortune compared to the 1% growth seen in the third quarter. It isn’t coincidence that the figure fell as it was at the end of 2012 and the early part of 2013 that the single currency soared in strength against its rivals. The decline in exports is the sharpest quarterly drop since 2009, at the height of the global economic crisis.
Imports into the region also saw a decline of 0.9%, their steepest decline since 2011. The weakening of import demand shows that consumer spending and demand has fallen highlighting just how under pressure the Eurozone economy actually is.
Today’s figures could offer support to the French President Francois Hollande, who has expressed concern over the recent strength of the currency and who has argued for the ECB to take action to weaken the Euro.
In the fourth quarter of 2012 the Euro strengthened by 5% against the US Dollar and rose even further in the early stages of 2013, hitting a peak of $1.37 at the end of January. We can expect the first quarter trade data for 2013 to show an even bigger widening.
Current Euro exchange rates
As of 11:15 am
The Euro to Pound Sterling exchange rate is currently trading in the region of 0.8640
The Euro to US Dollar exchange rate is currently trading in the region of 1.3061
The Euro to Australian Dollar exchange rate is currently trading in the region of 1.2716
The Euro to New Zealand Dollar exchange rate is currently trading in the region of 1.5702