US Current Account Deficit Falls in Q1 2020 Due to Coronavirus-led Lockdown

The current account deficit in the US has fallen to the lowest levels seen in almost two years during Q1 2020 amid the global coronavirus

US Current Account Deficit Falls in Q1 2020 Due to Coronavirus-led Lockdown

The current account deficit in the US has fallen to the lowest levels seen in almost two years during Q1 2020 amid the global coronavirus crisis and the ensuing lockdowns. According to data released by the Commerce Department, US’s current account deficit fell by 0.1% to $104.2 billion, the smallest amount since Q2 2018.

Economists had forecast a sightly lower trade deficit for the period, at $103 billion instead. Meanwhile, the current account deficit for Q4 2019 was also revised lower, from $109.8 billion to $104.3 billion. The gap in the current account works out to around 1.9% of US’s GDP – the least contribution seen since 2017.

According to the department’s Bureau of Economic Analysis, the fall in the current account deficit was driven “in part, due to the impact of COVID-19, as many businesses were operating at limited capacity or ceased operations completely, and the movement of travelers across borders was restricted.”

During Q1 2020, exports goods and services as well as income from foreign residents reduced by $47.5 billion to touch $902.3 billion – the sharpest fall in 11 years. With exports falling to even lower levels in April when most countries around the world remained in a state of lockdown, economists expect the current account deficit to soar to as high as $120 billion during Q2 2020.

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Arslan Butt
Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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