Page last updated at 11:30 GMT, Friday, 16 May 2008 12:30 UK

Eurozone sees March trade deficit

Euro notes and coins
The euro has risen to record highs against sterling and the dollar this year

The eurozone recorded a surprise trade deficit in March as the strong euro hit exports and high oil prices drove up the price of imports.

The European Union's statistics office said the 15-nation euro bloc had a trade deficit of 2.3bn euros in March ($3.6bn; 1.8bn).

This compares with an 800m-euro surplus in February and a 7.5bn-euro surplus in the same period a year ago.

A stronger euro makes eurozone goods more expensive for customers overseas.

According to seasonally unadjusted data, eurozone exports fell 1% on an annualised basis in March while imports rose 7%.

Euro woes

Manufacturers and politicians have complained that the surging value of the euro, which rose from $1.52 at the start of March to $1.57 by the end, is making it difficult for Europe to remain competitive in a global market.

Car makers have been forced to shift more of their production to US factories to take advantage of the low value of the currency there, while plane maker Airbus has threatened to move manufacturing outside Europe for the first time.

In the past few weeks the euro has begun to show signs of losing momentum as traders weighed up whether the US economy was on the brink of a recovery, while betting that the European Central Bank will have to cut interest rates below 4% soon to steady the region's economy.

But a hawkish message from the ECB on the sustained risk of higher inflation last week amid lacklustre US data has led to the value of the euro rising again.

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