Eurozone Exports Rise as Euro Weakens

By Paul Hannon 

        Rising exports helped widen the eurozone's trade surplus in February, an indication that the weakening euro is delivering a boost to the currency area's modest economic recovery.
        The European Union's statistics agency said Wednesday the 19 countries that use the euro had a surplus in their trade in goods with the rest of the world of EUR20.3 billion ($21.5 billion), up from EUR14.4 billion in February 2014.
        That widening gap was due to a 4% increase in exports, while imports were little changed.
        The euro has been depreciating against the U.S. dollar and other major currencies since May 2014, a slide that has continued into 2015 with the launch of the European Central Bank's program of quantitative easing. That will involve the purchase of more than EUR1 trillion of mostly government bonds using freshly created money through September 2016, increasing the supply of euros and lowering their value on currency markets.
        Although policy makers stress that a weaker exchange rate isn't their primary goal in launching QE, they are counting on the euro's slide against the dollar to help boost exports and revive economic growth.
        Until recently, there had been few firm signs that this boost was proving substantial. Exports were unchanged on the year in January, while industrial production fell in that month.
        However, a March survey of manufacturers recorded the strongest rise in new export orders since April 2014, while figures released Tuesday showed industrial production jumped in February.
        If sustained, the rise in eurozone exports will fuel concerns in Washington about the impact of a weaker euro on U.S. economic growth. In its semiannual currency report published last week, the U.S. Treasury Department chastised Europe and Japan for excessive reliance on monetary policy to revive stagnant growth, worried that a failure to deploy other policy tools could further undermine an already gloomy global economic outlook.
        In its World Economic Outlook report, the International Monetary Fund Tuesday said that while a weaker euro will hurt U.S. exports in the short term, it will be beneficial in the medium term by helping Europe's economy recover and increase demand for U.S. exports.
        In a separate release, Eurostat said house prices across the eurozone fell 0.1% in the final three months of last year, but were up 1.1% on the last quarter of 2013. Critics of the ECB's stimulus programs--which include very low interest rates and cheap loans to banks as well as QE--say they will lead to fresh bubbles in the currency area's asset markets, and future crashes.
        But there were few signs of a eurozone-wide housing bubble as 2014 drew to an end. While Irish house prices rose by 16.3% on the year and Estonian house prices rose by 10.1%, France witnessed a 2% drop and Italy experienced a 2.9% decline.
        Write to Paul Hannon at paul.hannon@wsj.com
        (END) Dow Jones Newswires

        April 15, 2015 05:00 ET (09:00 GMT)

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