US trade gap with troubled Asian economies balloons

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THE US trade deficit with the troubled economies of South-east Asia ballooned in January, the Commerce Department said yesterday. The shortfall between American exports to and imports from Indonesia leapt by 121 per cent to $538m (pounds 326m), and the gap with South Korea by 151 per cent to $856m. The news that the politically sensitive bilateral deficit with Japan actually shrank by 15 per cent to $4.36bn could not distract attention from a record headline figure of $12.04bn for the monthly deficit on trade in goods and services.

Analysts said the weaker trade position would eat into the US economy's growth in the first quarter of this year. Other figures yesterday suggested that growth remained fast enough to raise inflationary pressure. There was a surprise increase of 0.3 per cent in the "core" consumer price index, although lower oil prices held the headline increase to 0.1 per cent. Real earnings jumped by 0.9 per cent in February following a similar increase in January.