Italy's trade balance showed a surplus of 2.52 billion euros (US$3.09 billion) in June compared to a 1.7 billion euros deficit a year earlier, suggesting the economy is doing better than previously feared.

Exports rose 5.5 per cent, driven by energy products. Imports fell by 7.1 per cent, owing to weak internal demand as Italians continued to be hit hard by high unemployment and tax hikes as they battle through a recession.

Exports outside the European Union rose by 12.3 per cent. Exports to Japan were up 38 per cent, to the United States, 35.4 per cent and to oil producing countries in OPEC by 33 per cent, the National Institute of Statistics said.

The decline in imports was largely due to a drop in demand for cars, down 26.3 per cent, and textiles, down 19.6 per cent.

In May, the trade balance over 12 months showed a surplus of 1.01 billion euros.

"The drop in the purchase of cars from Germany, chemical products from Belgium and computers from China accounts for almost 25 per cent of the downturn in imports," Istat said in a statement accompanying the figures.

Italy entered recession at the end of 2011. The economy shrank by 0.7 per cent in the second quarter of 2012, showing that the contraction is easing slightly but the country still continues to wallow in recession.

Italy is in the process of enacting deep reforms to put over-stretched public finances on a sustainable basis and to restructure the economy. On Tuesday, lawmakers approved 26 billion euros worth of spending cutbacks.

The trade balance has an important effect on a country's ability to pay its way in the world, as measured by the overall balance of payments, and also on the potential of the economy to grow.

A trade surplus is a factor of growth and countries in the eurozone, such as Italy, which are struggling to correct public finances and restructure their economies, are aiming to strengthen their external trade balances.

channelnewsasia.com