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Words in the News
Friday 21 February 2003
Record trade imbalance for the USA
George Bush The difference between the value of the products and services that the United States exports and imports rose twenty one percent compared with the previous year. This assessment from Mark Gregory:
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America's trade gap mushroomed last year largely because the US economy grew rather faster than its trading partners economies. While Americans bought record amounts of imported consumer goods, notably cars and electronic products, US exporters had a hard time selling into sluggish markets abroad.

The trade gap in manufactured products has been widening for sometime - partly due to the growing significance of imports from low wage developing nations, notably China. That's an established trend. More surprising were figures showing that last year imports of farm products into the US exceeded the value of agricultural exports for only the second time ever.

Worryingly for policy makers, the deficit in trade of all types of goods showed an unexpectedly large increase in the final month of last year. Economic theory suggests that ultimately excessive trade deficits are corrected by currency devaluation. A sudden slump in the value of the US dollar would probably have a destabilising impact on the entire world economy.

It hasn't happened yet - though the dollar has declined modestly in value in recent months - but it still might. America's trade gap is clearly huge, but nobody really knows whether it's unsustainable.

Mark Gregory, BBC
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trade gap
the difference between the total value of a country’s imported goods and services and exported goods and services
increased quickly or uncontrollably
trading partners
here, the countries that the United States of America buys goods and services from and sells goods and services to
imported consumer goods
products, like cars or food, that are brought into one country from another country, to sell to people
companies or people that send or sell products to another country
deficit in trade
the total amount by which money spent (on imports) is more than money received (through exports)
currency devaluation
a deliberate decrease in the value of a currency against an official standard, like gold; the end result is that the currency is worth less than before
sudden slump
a fast decrease in something; in this case the American dollar
destabilising impact
make something less stable and strong
something that is unsustainable can not continue over a long time period
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