Page 32 - The Indian EYE 111221

Business EYE NOVEMBER 12, 2021 | The Indian Eye 32

will trade deficit, inflation and supply

chain issues haunt 2022?

Through the first nine months of 2021, America’s deficit with China totaled $255.4

billion, an increase of 14.9% over the same period in 2020

Our Bureau
New York

ll is not good on the
economy front. The
Aproblem is three-folds:
trade deficit, inflation and sup-
ply chain issues. And there is
bad news on all the fronts. The
US trade deficit hit an all-time
high of $80.9 billion in Septem-
ber as American exports fell
sharply while imports, even with
supply chain problems at Amer-
ican ports, continue to climb. Huge numbers of containers are stuck in port areas around the world (ANI)
The September deficit
topped the previous record of to last year when many parts of for the global supply chain to economy blitzed by Covid-19,
$73.2 billion set in June, the the economy were shut down remain in crisis through 2022 but it’s also created its own set
Commerce Department report- because of the coronavirus. — and that the central bank is of challenges in the form of a
ed Thursday. The deficit is the In September, the deficit in preparing to deal with the at- backed-up supply chain that
gap between what the United goods rose to $98.2 billion, up tendant challenges for the US wasn’t built to weather a pan-
States exports to the rest of the a sharp 10% from the August economy. demic, and accompanying infla-
world and the imports it pur- deficit. The surplus in services, Speaking at a Bank for Inter- tion as people buoyed by an eco-
chases from foreign nations. which covers such things as air- national Settlements-South Af- nomic recovery keep spending.
In September, exports line travel and financial services, rican Reserve Bank centenary For the policymakers, the
plunged 3% to $207.6 billion rose 10.5% to $17.2 billion, still conference, Powell warned that challenge is to set the appro-
while imports rose 0.6% to well below the levels seen before “supply-side constraints have priate policy in response to de-
$288.5 billion. Part of the weak- the pandemic hit. The surplus in gotten worse” over the course velopments, while businesses
ness reflected a 15.5% drop in services is expected to rise fur- of the pandemic, while the sup- must decide how to incorpo-
petroleum exports related to ther as Covid-19 cases retreat ply chain and economic risks rate inflationary developments
the drilling rig and refinery shut- and travel restrictions are eased. are “clearly now to longer and into their business strategies.
downs during Hurricane Ida in The rising trade deficit sub- more-persistent bottlenecks, The task for both is unusually
the Gulf of Mexico. Economists tracted 1.1 percentage points and thus to higher inflation.” complex owing to the multiplic-
expect that decline to reverse in from growth in the July-Sep- Already, those bottlenecks ity of factors affecting inflation
coming months with petroleum tember quarter, a period when have slowed international com- along with uncertainty about its
production coming back on line. the economy, as measured by merce to a crawl as shipping drivers and their persistence.
The politically sensitive the gross domestic product, containers loaded with goods “Our view remains that much
goods deficit with China shot slowed to an annual growth rate wait to be unloaded and experts of what has driven inflation in
up 15% in September to $36.5 of just 2%, sharply lower than a advise making an early start on recent months is temporary but
billion. Through the first nine GDP growth rate of 6.7% in the holiday shopping. In addition to is proving to be more persistent
months of this year America’s April-June period. packages taking longer to show than anticipated. As a result, we
deficit with China, the largest As Covid-19 cases retreat up, consumers are likely also have been raising our inflation
with any country, totaled $255.4 and the supply chain becomes feeling the resulting inflation. forecast for a few months now
billion, an increase of 14.9% untangled, the US trade defi- However, Americans’ appe- as evidence accumulates that
over the same period in 2020. cit should start to improve in tite to consume hasn’t dimin- supply challenges are broader
The overall trade deficit coming months although the ished. After a brief dip at the and more persistent that earlier
through September hit $638.6 improvement may be modest, beginning of the pandemic, peo- assessed,” said an analyst.
billion, a 33.1% increase over economists say. ple have embraced both e-com- The world may be slowly
the same period last year. That Recently, Federal Reserve merce and brick-and-mortar recovering from the pandemic,
big jump reflects the surge in US chair Jerome Powell said that retail as pandemic restrictions but its after effects may contin-
demand for imports compares Americans should be prepared have eased. That’s good for an ue – even into the next year.

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