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Eurozone Exports Rise

The eurozone economy has enjoyed a surprisingly strong 2017.The eurozone economy has enjoyed a surprisingly strong 2017.

Exports of goods from the eurozone jumped in August, suggesting the euro’s appreciation against other major currencies has yet to crimp economic growth.

Adjusted for seasonal patterns, eurozone exports rose by 2.5% in August from July, while imports were up by just 0.4%, the European Union’s statistics agency said Monday, MarketWatch reported.

As a result, exports of goods exceeded imports by €21.6 billion ($25.5 billion), up from the €17.9 billion surplus recorded in July.

The eurozone economy has enjoyed a surprisingly strong 2017, with growth accelerating in the three months to June and becoming more broad based.

That has fueled expectations that the European Central Bank will start to wind down its purchases of government bonds from January. Since that would slow the supply of new euros, the currency has strengthened against the US dollar and the British pound over recent months.

That appreciation threatens eurozone businesses that sell their products overseas, since it makes them more expensive to foreign buyers. Indeed, seasonally adjusted exports fell in both June and July, while the trade surplus narrowed in the later month.

In recent months, ECB policy makers have repeatedly highlighted the stronger euro as a possible impediment to boosting inflation.

“Even if the recent appreciation is not particularly large, we have to be very careful and monitor these developments,” Bank of Italy Gov. Ignazio Visco told The Wall Street Journal recently.

The August trade figures are the last policy makers will see before their Oct. 26 meeting, at which they are expected to decide to scale down their asset purchases. The jump in exports should offer them some reassurance that the euro’s gains haven’t yet slowed the recovery, as should a survey of 3,000 manufacturing companies that showed export orders remained strong in September.

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