Annual trade deficit improving thanks to collapse in domestic demand

The current account deficit widened in August from July but was still below last year's levels, reflecting continued improvement in the trade balance as exports stayed in positive territory and imports shrank. The current account deficit widened to $290 million in August from $108 million in July, exactly in line with market expectations and down from $360 million for the same month a year ago. Exports stood at $2.69 billion last month, a 2.8% jump in year-on-year terms. Imports, which stood at $3.57 billion in August against $3.76 billion in July, were down 1.6% from August 2001. The trade deficit came in at $887 million - against $608 million in July. "The key message is that exports are growing," said Zsolt Papp, an analyst with ABN Amro in London. "Imports are negative, which means that there is still very little domestic demand pressure". In the year to August, the current account deficit was down 8.2% to $4.35 billion. Analysts estimated the rolling 12-month current account deficit at 3.4%-3.6% of GDP, a level they regard as benign. (Reuters)