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