European Crisis

Exports are under pressure because of the crisis in Europe. The 17-nation euro area will shrink 0.1 percent in 2012 and expand 0.9 percent in 2013, the Organization for Economic Cooperation and Development said on May 22, when it trimmed its forecast. By contrast, the OECD raised projections for U.S. growth, to 2.4 percent in 2012 and 2.6 percent next year.

Still, “the situation in Europe poses significant risks to the U.S. financial system and economy and must be monitored closely,” Federal Reserve Chairman Ben S. Bernanke said yesterday in testimony to Congress in Washington.

China, the world’s second-biggest economy, is cooling. It grew 8.1 percent in the first quarter of 2012 from a year earlier, the fifth straight deceleration. The country yesterday cut borrowing costs for the first time since 2008 and loosened controls on banks’ lending and deposit rates, stepping up efforts to combat a deepening slowdown as Europe’s debt crisis worsens.

DuPont Co., the most valuable U.S. chemicals producer, is among companies watching the situation in Europe. DuPont’s first-quarter earnings exceeded analysts’ estimates as its agriculture unit benefited from rising corn-seed demand in Brazil and an early spring in the U.S. and Europe.

DuPont Co.

In “Europe the macro trends are not good right now,” Nicholas Fanandakis, chief financial officer of Wilmington, Delaware-based DuPont, said in a June 6 conference call with analysts. “The economy is in a state of flux. Where it’s going to come out in the end is anyone’s guess.” Even so, the picture is mixed, with parts of the agriculture business “very strong” and segments such as “the industrial side not as strong an environment,” he said.

The recent pickup in the value of the U.S. currency may make America’s exports less competitive. The dollar has climbed about 5 percent from this year’s low in February against a trade-weighted basket of currencies from the country’s biggest trading partners, according to Federal Reserve data.

The trade deficit with China remains a thorny issue as the U.S. presses the Asian country to allow the yuan to rise against the dollar.

The Treasury Department will continue to “closely monitor” the pace of yuan appreciation, according to its semi- annual report to Congress on exchange-rate policies released May 25. It will also push for “policy changes that yield greater exchange-rate flexibility,” the report said.