Strong U.S. dollar likely to keep current account deficit on a deepening path
US current account deficit widened to $113.5 bln in Q4 from $98.9 bln in the prior quarter (revised slightly from $100.3 bln). That's the largest deficit in 2½ years. As a share of GDP, the shortfall weighs in at 2.6%, 0…
US current account deficit widened to $113.5 bln in Q4 from $98.9 bln in the prior quarter (revised slightly from $100.3 bln). That's the largest deficit in 2½ years.
As a share of GDP, the shortfall weighs in at 2.6%, 0.6 ppts wider than a year ago, but just slightly below the 40-year average.
The goods & services deficit widened to $127.0 bln in the quarter from $123.9 bln, as real net exports carved 1.1 ppts from GDP growth.
BMO Capital Markets notes ....
While lower oil prices helped reduce the import bill, strong consumer demand and the surging U.S. dollar boosted non-energy import volumes.
Primary income also weakened to $50.6 bln from $59.8 bln in Q3, mainly on the back of lower direct investment income.
We expect the strong U.S. dollar will likely keep the current account deficit on a deepening path in the year ahead.
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