Asia's share of U.S. trade deficit smaller

Asia's share of U.S. trade deficit smaller

Asia does not deserve all the blame for the United
States' burgeoning trade deficit, DBS Bank Research said on
Monday.

Contrary to popular perceptions, the bank's economists found
Asia is now responsible for a smaller share of the deficit that
six years ago.

Other regions such as Europe are increasing their share of the
deficit, which economists believe is the largest risk to the
global economy.

In a research report published in The Straits Times, DBS
analyst Philip Wee wrote, "Let us not be too hasty in
generalising that the U.S. current account deficit problem is
simply between America and Asia alone."

He found that 10 Asian markets - China, Japan, Hong Kong,
Taiwan, South Korea, Singapore, Malaysia, Thailand, Indonesia and
the Philippines - were responsible for 46 percent of the deficit
in September, a drop from 76 percent in 1998.

Wee acknowledged that as a bloc, Asia still accounts for the
bulk of the deficit. He noted however that many other countries
have also benefited from growing surpluses with the U.S.

The U.S. trade deficit with Europe has expanded 3.8 times over
the past six year, he pointed out. Europe's share of the deficit
rose from 11.7 per cent in 1998 to nearly 17 per cent in
September.

The Organization of Petroleum Exporting Countries has more
than doubled its share of the deficit as a result of the surge in
oil prices, he added.

"For too Long, G-7 nations have sought to make a scapegoat of
China and Asia, and blamed the region for seeking unfair
competitive advances by keeping their currencies undervalued,"
Wee maintained. --DPA