December 19, 2006	Tuesday	Ziqa'ad 27, 1427

WASHINGTON, Dec 18: The US balance of payments deficit worsened in the third quarter amid surging costs for oil and a jump in Chinese imports, data showed on Monday.

The current account deficit, the broadest measure of trade and investment flows, rose to $225.6bn in the third quarter, a record in dollar terms, the Commerce Department reported.

The deficit grew from a revised $217.1bn in the second quarter.

In the third quarter, the so-called balance of payments gap represented 6.8 per cent of US gross domestic product (GDP). That was higher than the 6.6 per cent in the second quarter, but below the record seven per cent in the last quarter of 2005.

The deficit is equivalent to a huge debt owed by the United States to the rest of the world. So far, the US economy has financed its current account gap on favourable terms thanks to foreign demand for US securities.

For the first three quarters of 2006, the current account deficit totalled $655.9 billion, putting it on track for a new annual record.

The latest figure was roughly in line with analysts’ average forecasts of $225 billion.

The deficit on goods alone increased to $218.6 billion in the third quarter from $210.6 billion in the second. That included imports of $480.7 billion and exports of $262.1.

The surplus on services was $18.3 billion in the third quarter, up from $17.5 billion.

The deficit on income increased to $3.8 billion in the third quarter from $2.2 billion in the second.

Income receipts on US-owned assets abroad increased to $160.1 billion from $155.3 billion.

Economist Peter Morici of the University of Maryland noted that 78 per cent of the deficit came from trade with China along with petroleum and automotive products.—AFP