The US current account deficit narrowed significantly in the second quarter on the back of a sharp increase in merchandise exports.
And the US Department of Commerce said “the current account deficit, which measures the flow of goods, services, and investment in and out of a country, narrowed 11.1 percent to $251.1 billion in the fourth quarter.”
According to the data, the current account deficit now stands at 4 percent of GDP, compared with 4.6 percent in January-March. The deficit peaked at 6.3 percent of GDP in the fourth quarter of 2005, and although the deficit deficit is still large, it does not affect the dollar given its status as the world’s reserve currency.
Merchandise exports jumped $52.0 billion to $539.9 billion. Exports were supported by the supply of industrial goods and materials, mainly oil and products.
Exports were one of the few bright spots in the economy in the last quarter, which helped limit the negative impact of the sharp slowdown in inventories on GDP. Gross domestic product in the United States contracted at an annualized rate of 0.6 percent in the second quarter, after declining by 1.6 percent in the January-March quarter.
Source: El Iktisad
