- The US trade deficit hit a record $489bn (£258bn)
in 2003, with a quarter of the shortfall coming in trade with China, official
figures have shown. The deficit was 17.1% larger than the previous record
gap recorded in 2002.
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- The US economy pulled in 8.3% more imports in 2003 than
2002, while exports grew at a slower pace of 4.6%.
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- The news pushed the dollar to an 11-year low against
the pound, and to within a cent of its all-time low against the euro, before
recovering.
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- The euro skirted a new record high but in late-day deals
had fallen to $1.2754 dollars, having at one point in the session touched
$1.2896, just short of its record 1.2898 set on 12 January.
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- The pound was quoted at $1.8867, down from $1.8898, having
earlier in the day hit a new 11-year high of $1.8986.
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- The burgeoning deficit has put downward pressure on the
dollar, which could create inflationary pressure as Americans pay more
for imported goods.
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- The monthly deficit hit a near-record $42.5bn in December,
well above a median analyst forecast of $40bn.
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- Gary Thayer, chief economist at AG Edwards & Sons,
said: "(The figures are) suggesting the decline we've seen in the
dollar over the last couple of years is not having an impact.
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- "It suggests the dollar may still need to fall to
help narrow the trade deficit. But there's a risk to higher inflation if
it does."
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- The dollar has fallen heavily against the euro and other
currencies over the past six months, pressured by concerns that the soaring
trade gap and a hefty US budget deficit could destabilise the economy.
BMO financial group senior economist Sal Guatieri said: "What seems
to be happening is that strong US demand is trumping the weak US dollar,
causing the trade deficit to widen.
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- "It probably means the US dollar has to weaken further
for the trade side to contribute to economic growth through this year and
as well reduce the current account deficit."
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- European trade
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- In testimony this week before Congress, Federal Reserve
chairman Alan Greenspan appeared comfortable with the dollar's decline,
saying foreign companies had so far been able to absorb the impact.
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- He said it would also eventually help contain the huge
trade surplus as foreign producers export less to the United States.
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- The politically sensitive deficit with China, among the
world's biggest exporters, grew to $124bn from $103bn the previous year.
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- The deficit with the EU surged to $10.29bn from $7.35bn.
With the eurozone, the gap grew to $8.19bn from $6bn.
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- © BBC MMIV
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- http://news.bbc.co.uk/2/hi/business/3486561.stm
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