Source: AFP
The U.S. trade deficit narrowed in 2023 to its smallest in three years, according to government data released Wednesday, while America bought more goods from Mexico than China for the first time in nearly two decades.
The latest data adds to a string of positive economic news for President Joe Biden, who is working to boost sentiment about his handling of the economy as his November re-election campaign gathers pace.
For all of 2023, the total trade gap was $773.4 billion, down 18.7 percent from $951.2 billion the previous year, according to data from the U.S. Commerce Department.
In 2022, the country saw its largest deficit in government figures dating back to 1960.
However, the latest figures showed a narrowing of the goods deficit last year, with goods imports falling more than exports.
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Meanwhile, services exports increased and the services surplus widened.
Surprisingly resilient consumption last year helped prop up the US economy, but analysts expect the impact of higher interest rates to bite, slowing consumer spending and increasing pressure on imports.
In December, the deficit widened slightly from November, the commerce ministry added.
The deficit was $62.2 billion for the final month of last year, up $0.3 billion from November’s revised level of $61.9 billion.
This was as exports and imports increased.
“The trade deficit in real terms was a positive contributor to growth in the quarter,” said Matthew Martin, US economist at Oxford Economics.
He added that December’s trade data confirmed what analysts knew from the fourth-quarter GDP report.
“The outlook for trade flows going forward is probably subdued,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, said in a note.
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This is due to “expectations of slower demand and growth going forward, both domestically and abroad,” he said.
Mexico, China trade
On Wednesday, Commerce Department data also showed the United States bought more goods from Mexico than China in 2023, for the first time in nearly two decades.
This comes as Washington pursues an approach it calls “friendshoring.”
That includes diversifying U.S. supply chains among allies and partners amid heightened concern over competition with China and national security tensions between the world’s two largest economies.
In 2023, the US goods deficit with Mexico increased to $152.4 billion, while with China it decreased to $279.4 billion.
But imports from Mexico rose $20.8 billion to $475.6 billion, while the corresponding figure for China fell to $427.2 billion last year.
Source: AFP