THE United States ran up its worst trade deficit since 1988 last year and many analysts are predicting no major improvement in 1997 in the face of continued gaps with China and Japan.
In 1996, the Commerce Department reported yesterday, the shortfall in goods and services expanded from $105.1 billion in 1995 to 114.2 billion (£72.7 billion), the largest in eight years.
In December the deficit jumped nearly 30 per cent over November to $10.3 billion, largely in response to an increase in imports of petroleum products, capital goods and consumer items.
"The situation will probably get a little worse in 1997 because exports are more expensive, imports are cheaper and the economy is doing beautifully," noted Mr Delos Smith, an economist with the Conference Board, a New Yorkbased research group.
Analysts are also generally pessimistic about future trade with China, with which the United States now has its largest trade gap, and Japan, which occupies first place in the deficit table.
The gap with China for the year expanded to $39.5 billion in 1996 from $33.8 billion in 1995. While in December the deficit shrank to $2.6 billion from $3 billion in November, US officials remained concerned about the near term trend.
The administration meanwhile hailed a 19 per cent contraction in the deficit with Japan from 1995 to 1996, down to $47.7 billion from $59.1 billion.
