Under the influence of multiple factors such as the global economic slowdown, weak demand, and skyrocketing energy costs, serious imbalances have occurred in the import and export of many countries. At the same time, affected by factors such as the strong US dollar, trade deficits among many countries have intensified. Industry insiders said that with the Federal Reserve’s aggressive interest rate hikes, global monetary policy paths have become more divergent, which will keep the U.S. dollar exchange rate high in the near future and intensify its impact on global trade. Not only the United States, but also export powers such as France, Japan, and South Korea are also suffering from trade deficit anxiety.
USA
Trade deficit widens for two consecutive months
According to Xinhua News Agency, data recently released by the U.S. Department of Commerce showed that due to weak exports, the U.S. trade deficit in goods and services rose 5.4% month-on-month to $78.2 billion in October, expanding for two consecutive months.
Data show that mainly due to the reduction in natural gas, oil and other exports, U.S. exports fell by 0.7% month-on-month to $256.6 billion in October, while imports increased by 0.6% month-on-month to $334.8 billion, resulting in a significant increase in the trade deficit that month.
Specifically, the U.S. merchandise trade deficit increased by US$6.1 billion month-on-month to US$99.6 billion in October. Among them, merchandise exports decreased by US$3.7 billion to US$176 billion, and exports of industrial supplies and materials, consumer goods, etc. all declined month-on-month. The value of merchandise imports increased by US$2.4 billion to US$275.6 billion. In October, the U.S. services trade surplus increased by US$2.1 billion to US$21.4 billion.
Analysts believe that due to the general rise in global inflation, overseas market demand for U.S. oil and natural gas and other energy products slowed down in October, resulting in weak U.S. exports and a significant increase in the trade deficit. At the same time, the Federal Reserve’s continued increase in the federal funds interest rate has caused the dollar’s exchange rate to rise sharply against other currencies, which is not conducive to U.S. exports. In the future, as the Federal Reserve continues to raise interest rates, U.S. exports may continue to weaken, putting pressure on economic growth.
France
Trade deficit expected to hit record in 2022
French media “BFMTV” reported that according to a report released by Business France, in the first three quarters of 2022, French merchandise exports reached 439 billion euros, an increase of 20% over the same period last year.
French exports have rebounded again, however, high inflation in energy and other commodities is eroding foreign trade data, leading to the worst trade deficit in history in 2022. According to the 2023 budget bill documents, the French government expects to have a negative balance of 156 billion euros.
French Economy and Finance Minister Le Maire recently stated that rising electricity and natural gas prices are posing “significant risks” to French industry, and the energy crisis is expected to reduce industrial production by 10% in the fourth quarter. At the same time, Roland Lescure, deputy minister of industrial affairs at the French Ministry of Economy and Finance, pointed out that about 350 companies in trouble have applied for assistance from the French government, and this number is just the “tip of the iceberg.”
In fact, energy prices have been rising for more than a year, driven largely by a strong economic recovery following COVID-19 containment measures. Growth has accelerated since Russia invaded Ukraine, which has also put significant pressure on grain prices.
The resulting deterioration in the energy balance has led to an increase in the level of France’s trade deficit – a reason given by French customs for months. As of September, the trailing 12-month deficit had reached 149.9 billion euros, compared with 85 billion euros in 2021, an all-time high.
Japan
Trade deficit recorded for 16 consecutive months
According to global market reports, Japan’s trade deficit narrowed less than expected in November, although commodity price increases have cooled.
Japan’s Ministry of Finance announced on Thursday that the trade deficit fell to 2 trillion yen (approximately US$14.8 billion) from 2.17 trillion yen in November, remaining above 2 trillion yen for the fourth consecutive month. Economists had expected a trade deficit of 1.68 trillion yen.
In November, imports increased by 30.3% year-on-year, which was slower than the increase of more than 50% in the previous month, and exports increased by 20%.
This is Japan’s 16th consecutive month of trade deficit, and this year’s annual trade deficit is expected to hit a record. As of September, Japan’s cumulative trade deficit this year has reached 14.3 trillion yen, breaking the annual record of 12.8 trillion yen set in 2014.
The slight narrowing of the trade deficit in November was partly due to slower year-on-year increases in commodity prices. Crude oil prices have fallen about 40% since their highs in March this year, and growing concerns about a global economic slowdown may further reduce crude demand.
South Korea
Worried that the status of an export powerhouse will be shaken
According to the Global Times, preliminary statistics released by the Korean Customs Service on the 12th showed that South Korea’s exports in the first 10 days of December decreased by 20.8% year-on-year to US$15.421 billion.
According to Korean media analysis, South Korea’s exports have declined continuously in the past two months, and in the first 10 days of this month…The U.S. trade deficit is close to US$5 billion. In the future, South Korea is likely to set a new record of nine consecutive months of trade deficit since 1997.
By category, in the first 10 days of this month, South Korea’s largest export commodity, semiconductor exports, fell 27.6%, with the decline increasing month by month. Steel products, auto parts, wireless communication equipment, and precision instruments also experienced larger declines. But at the same time, exports of petrochemical products, automobiles, and ships have increased. During the same period, South Korea’s import volume also decreased by 7.3% year-on-year to US$20.344 billion.
As of the 10th of this month, South Korea’s cumulative trade deficit for the whole year reached US$47.464 billion, reaching the highest level in history.
“South Korea’s status as an export powerhouse is shaken,” South Korea’s “Central Daily News” reported. South Korea’s weak exports are the result of a combination of factors, including the long-term conflict between Russia and Ukraine, the global economic downturn, and the decline in unit prices of major export commodities such as semiconductors. Most forecasts see this situation continuing into the first half of next year.
Spain
Trade deficit nearly quadrupled from January to October
Financial News Agency, December 15 (Xinhua): The Ministry of Industry said on Thursday that soaring energy import costs have caused Spain’s trade deficit to expand nearly four times in the first 10 months of 2022 compared with the same period last year.
Spain’s 10-month deficit totaled 60.29 billion euros, compared with 16.63 billion euros in the same period last year and more than double the deficit for all of 2021, the ministry said in its monthly report.
The ministry said imports from January to October rose 38% year-on-year to 380.02 billion euros, while exports rose 24% to 319.73 billion euros.
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