US trade gap at highest in 3 years
Source: Agencies |
March 15, 2012, Thursday
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Print Edition
Print Edition
THE US deficit in the broadest measure of foreign trade increased at the end of last year to the highest level in three years. It was widened by a slight decline in exports and higher demand for foreign goods.
The Commerce Department said yesterday the current account trade deficit rose 15.3 percent in October-December to US$124.1 billion.
For the year, the current account gap rose 0.6 percent to US$473.4 billion, the largest imbalance since 2008.
Exports fell slightly to US$380.4 billion, partly due to a drop in overseas demand for US airline tickets. Imports rose to US$566.7 billion. The gain was partly driven by more buying of imported airplanes.
A higher trade deficit acts as a drag on growth. It means more goods and services are being purchased from overseas, while US companies are making fewer sales overseas.
Economists think the deficit will keep rising in 2012. Europe's debt crisis is likely to drag on US exports, as is slower growth in Asia. And stronger expansion in the US should boosts imports.
The January deficit for US trade in goods and services gained to US$52.6 billion, the largest monthly imbalance in over three years.
The current account is an even broader measure of trade. It covers not only trade in goods but also services, such as air travel, and investment flows among nations. Economists watch the current account as a sign of how much the US needs to borrow from foreigners.
The current account gap hit an all-time high of US$800.6 billion in 2006. It then shrank after the recession cut demand for imports. The gap began widening again after the recession ended in June 2009.
The overall economy grew just 1.7 percent in 2011. The US struggled in the early part of the year from a spike in energy prices, supply disruptions caused by the Japanese earthquake and turbulent stock markets.
The Commerce Department said yesterday the current account trade deficit rose 15.3 percent in October-December to US$124.1 billion.
For the year, the current account gap rose 0.6 percent to US$473.4 billion, the largest imbalance since 2008.
Exports fell slightly to US$380.4 billion, partly due to a drop in overseas demand for US airline tickets. Imports rose to US$566.7 billion. The gain was partly driven by more buying of imported airplanes.
A higher trade deficit acts as a drag on growth. It means more goods and services are being purchased from overseas, while US companies are making fewer sales overseas.
Economists think the deficit will keep rising in 2012. Europe's debt crisis is likely to drag on US exports, as is slower growth in Asia. And stronger expansion in the US should boosts imports.
The January deficit for US trade in goods and services gained to US$52.6 billion, the largest monthly imbalance in over three years.
The current account is an even broader measure of trade. It covers not only trade in goods but also services, such as air travel, and investment flows among nations. Economists watch the current account as a sign of how much the US needs to borrow from foreigners.
The current account gap hit an all-time high of US$800.6 billion in 2006. It then shrank after the recession cut demand for imports. The gap began widening again after the recession ended in June 2009.
The overall economy grew just 1.7 percent in 2011. The US struggled in the early part of the year from a spike in energy prices, supply disruptions caused by the Japanese earthquake and turbulent stock markets.
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