The eurozone's trade deficit widened further in May, data showed on Wednesday, a trend economists put down to expensive energy and internal demand from a recovering economy driving imports faster than exports.
The European Union's statistics office said the non-seasonally adjusted trade gap was 3.2 billion euros ($4.0 billion), against a revised April gap of 1.9 billion and a 2.3 billion surplus in May last year.
Analysts polled by Reuters had forecast the deficit would shrink to 1.2 billion euros in May. Eurostat said that non-seasonally adjusted imports grew 21 percent year-on-year in May while exports increased 15 percent. Adjusted for seasonally, the widening of the gap was less dramatic - it rose to 0.9 billion euros from 0.7 billion in April with exports up 1.2 percent month-on-month and imports rising 1.4 percent.
"This indicates that eurozone exports are continuing to make a major contribution to the region's upturn following strong growth in the first quarter," said Howard Archer, Chief European economist at Global Insight.
"Although the robust rise in eurozone imports in May was undoubtedly pushed up by high oil prices, it also suggests that domestic demand was relatively healthy," he said. The European Commission and the European Central Bank expect eurozone economic growth to accelerate to 2.1 percent this year from 1.3 percent in 2005 with exports and domestic demand among the key growth drivers.
On a quarterly basis, eurozone growth doubled to 0.6 percent in the first quarter against the previous three months and the Commission expects another 0.6 percent quarterly expansion in the March-June period despite high energy prices, which raise business costs and cut consumers' spending power.
"These (trade) figures confirm the very strong level of economic activity across the eurozone," said Dominique Barbet, economist at BNP Paribas. The May trade data does not contain breakdowns but detailed data for April available on Wednesday showed a trend of a steeply rising deficit in energy and primary products trade.
Eurozone energy imports trade and the deficit in energy trade hit 83.7 billion euros in the eurozone for January-April, compared with 57.5 billion euros a year earlier.
Energy exporter Russia saw its shipments to the eurozone grow by 41 percent in the first four months of this year and the eurozone's trade deficit with Russia widened to 16.8 billion euros in the January-April period.
Imports from China also outpaced export growth. The trade gap with the Asian giant rose to 26.9 billion euros in the first four months of 2006 from 21.1 billion euros a year before. In the 25-country EU, May's trade deficit was 15.7 billion euros, widening from a revised 14.5 billion euro gap in April and a 7.3 billion euro deficit a year earlier.