Wednesday, June 13, 2007

Russia-New Buyer Of Last Resort

One seemingly puzzling thing about recent trade statistics have been that nearly everyone's trade balance seems to have strengthened recently. America's deficit has fallen by several billions of dollars per month compared to last year. Meanwhile, the trade- and current account surpluses of East Asia's two giants, China and Japan have both increased significantly. And the Euro-zone has seen its deficit turn into a surplus due to the soaring surplus in Germany. But how is this possible? I mean, considering the fact that trade balances by necessity are zero sum games.

While I knew the surpluses of the Scandinavian countries have fallen somewhat, they are far to small to account for more than a fraction of the strengthening balances of the
US, the Euro zone, China and Japan. While statistical errors cannot be ruled out, one partial explanation seen in actual statistics seems to be a falling surplus in Russia, where imports rose a full 50% (!) while exports only rose 8.6%. The decline in the surplus is not fully as dramatic as those numbers would first suggest since exports were more than twice as high than imports to begin with (now somewhat less than twice as high), but still the surplus fell with $10 billion compared to last year, or $2.5 billion per month.


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