6.2% from the previous month ↓… lowest this year
As gas prices rise, demand increases
The US trade balance improved in June. The trade deficit in June fell 6% from the previous month, reaching its lowest level this year. Analysts say that the trade balance has improved due to an increase in energy exports.
The U.S. Department of Commerce announced on the 4th (local time) that the U.S. trade deficit in goods and services fell 6.2% from the previous month to $79.6 billion (about 104.2 trillion won). That was below the $80 billion Wall Street forecast. The trade deficit narrowed for three straight months, the lowest in the last six months. The trade deficit fell below $80 billion for the first time since December last year.
Exports increased and the deficit narrowed. US exports in June reached $260.8 billion (about 341 trillion won), an increase of 1.7% from May ($256.5 billion), a record high. Imports totaled $340.4 billion (about 445 trillion won), down 0.3% from the record high in May ($341.4 billion).
Energy exports led to an improvement in the trade balance. According to the U.S. Department of Commerce, exports of natural gas-related products increased by $1.6 billion in June compared to May. Exports of natural gas, oil and industrial raw materials rose 6.5% from May.
From January to June, U.S. petroleum product exports rose 79%. As international oil prices soared due to the Ukraine war, U.S. energy exports also increased. According to the U.S. Energy Information Administration (EIA), the U.S. imported more crude oil than its exports last year, but the gap was the second lowest since 1985. In the case of natural gas, exports surpassed imports.
The US trade balance with China, a politically sensitive indicator, deteriorated somewhat. The trade deficit recorded US$36.9 billion (about 48 trillion won) in June, an increase of US$4.7 billion (17%) from the previous month. During this period, the US exported US$21.2 billion to Taiwan and imported US$44.8 billion. Of the products imported from Taiwan, 61% are known to be electronic and mechanical products.
The decline in the trade deficit is expected to improve U.S. gross domestic product (GDP). The trade deficit, which pulled down 3.2 percentage points of GDP in the first quarter of this year, is improving in the second quarter. On the 28th of last month, the U.S. Department of Commerce announced that GDP contracted 0.9% in the second quarter of this year. During this period, imports increased by 3.1%, but exports increased by 18%, lessening the decline.
But there are also pessimistic prospects. If the global economic crisis deepens, the dollar could continue to strengthen. When each country’s currency depreciates against the dollar, its purchasing power for U.S. products declines and exports contract. Mahad Rashid, a researcher at the Oxford Economist, a British think tank, predicted that “the pace of improvement in the US trade balance will also slow in the second half of the year.”
Reporter Oh Hyun-woo [email protected]