Photo: Tak, Wikimedia Commons
After an economic bust, every political leader in the world comes up with the same idea: We’re going to make our economy more competitive, and export more stuff to the rest of the world.Unfortunately, by definition, not everyone can run trade surpluses, or even shrink their trade deficits all at the same time. It’s always going to net out to zero (or at least it should if things were measured perfectly), and so an improvement in the balance of trade for one country is always going to result in a worsening for another country.
And that’s what we’re seeing right now, as the US economy turns.
Last night, Japan posted a wider than expected trade deficit of $6.5 billion, which was double what economists had expected, according to WSJ:
The deficit—almost double the forecast by economists surveyed by Dow Jones Newswires—came as exports dropped 8.1% on year on weaker Chinese and European demand for Japan-made goods, such as semiconductors. The decline was the largest in six months.
It makes sense that this news comes a few days after the Eurozone posted its trade numbers.
How we’re they? Here’s the BBC:
The eurozone’s trade surplus hit 14.9bn euros ($18.3bn; £11.7bn) in June up from 200m euros a year ago.
The surplus was the highest since the European Union’s statistics agency began collecting data in 1999.
Meanwhile, in the US, our own trade deficit shrunk more than expected last month. You can see the jump in the chart here.
And while we’re at it, here’s China, whose trade surplus shrunk in the last month (via TradingEconomics)
So it all nets out once again. Japan and China see their numbers worsen, while the US and Europe see their numbers improve.
The only bad news, all of the data seems to be consistent with one thing: Slowing global trade.
In fact, if you break down Japan’s numbers, you can really get a good sense of what the global economy is doing.
This chart from Markit Economics shows Japanese exports to Europe and China gonig negative year-on-year, with the US still clinging to positive territory.
Photo: Markit Economics
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