The current-account deficit for the 16 countries that use the euro rose nearly to a two-year high during November as a gap in goods trade widened, according to The Wall Street Journal. On Wednesday, the European Central Bank reported that the cumulative eurozone current-account deficit reached €11.2 billion in November from October’s revised level of €9.6 billion, marking the highest level since December 2008. The report showed that the trade deficit for goods grew to €4 billion in November from €2.4 billion previously, while the surplus in services grew to €3.5 billion from €1.6 billion.
The deficit is expected to growth in the coming months as slowing activity weakens export growth according to Zach Witton of Moody’s Analytics. The analyst warned, “There is a high risk that the recovery will stall as major fiscal consolidation through the region weighs on demand.” Witton said that in turn he expects that the deficit will face less pressure “as weaker domestic demand weighs on exports.” The ECB report also showed that new investment inflows totaled €38 billion in November, on an increase in holdings of debt instruments by a net €26.2 billion.
