May US trade deficit widens as exports, imports fall due to Covid-19 pandemic

WASHINGTON: The coronavirus pandemic caused the US trade deficit to widen in May as both exports and imports fell, the Commerce Department said yesterday.

The rise in the deficit to US$54.6 billion (RM234 billion) was worse than expected and came after April data showed both exports and imports dropping by a record amount, sending the trade deficit climbing to an upwardly revised US$49.8 billion.

The Commerce Department put the blame for the continued drop in activity on the pandemic, which has caused countries to shut their borders and order businesses closed, at least temporarily, to stop the virus.

“The declines in exports and imports that continued in May were, in part, due to the impact of Covid-19, as many businesses were operating at limited capacity or ceased operations completely, and the movement of travellers across borders was restricted,” the department said.

Exports were down 4.4% to US$144.5 billion, while imports fell 0.9% to US$199.1 billion. Compared to last year, they were down 14% and 13.1%, respectively, though the overall deficit was 9.1% lower.

Oxford Economics said in a note that the latest data showed trade activity contracting 2.4% in May, and remains still more than a quarter below its peak.

“We anticipate that trade activity will stage a slow recovery in the coming months as global lockdowns ease. However, with activity still globally depressed and the US health crisis not under control, downside risks are significant,” Oxford said.

The goods deficit widened to US$76.1 billion, while the services surplus ticked down to US$21.5 billion.

The United States’ deficit with the European Union fell US$1.6 billion to US$12.7 billion in May, as both exports and imports dropped.

However the gap with China widened to US$27.9 billion, caused by a rise in imports of US$2.7 billion even as exports also increased US$0.7 billion. – AFP

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