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For the first time since 2012, November’s US trade deficit has exceeded USD 50 billion. It has risen sharply in the last two months, by almost USD 6 billion. This deterioration is due to strong growth in goods imports, which have risen 3.8% in volume, while exports have only risen 2.1%. The services balance is stable.
This pick-up in the pace of imports will drag down 2017 fourth-quarter growth. Based on end-November data, the impact could be up to 1 point in GDP growth, but within a context of particularly robust final demand.
Aside from the last quarter of 2017, export growth has actually been slightly ahead of imports: 7.3% and 5.9% respectively year-on-year. These readings reflect healthy global economic conditions. However, if we were to see the end-of-year scenario continue, could the trade balance deteriorate further, becoming a long-lasting drag on growth? Although not impossible, this is unlikely. It is typical to see international trade boosting growth during the final phase of a cycle. Indeed, it is often at this point that growth in the rest of the world pushes US export levels up.
The opinion expressed above is dated 11 January 2018 and is liable to change.
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