*EPF414 06/19/2003
U.S. Current Account Deficit Increases as Trade Deficit Widens
(U.S. residents' acquisitions of foreign assets up sharply in 1st quarter) (550)

Washington -- The deficit in the U.S. current account -- the broadest measure of U.S. transactions with the rest of the world -- went up slightly in January-March with the widening U.S. trade deficit in merchandise goods accounting for about half the increase, the Department of Commerce says.

In a June 19 press release, the department said also the U.S. surplus in services trade decreased, U.S. unilateral transfers to foreign countries including foreign aid increased, and the U.S. surplus in income from cross-border investments decreased.

The current account deficit was estimated at a seasonally adjusted $136,112 million, up from a revised $128,586 million in the fourth quarter of 2002.

The Commerce Department said imports of goods went up more in the first quarter than exports of goods did with petroleum imports accounting for three-quarters of the increase. Services revenue decreased with big drops in travel and passenger fares, "reflecting concerns about the war in Iraq and the SARS virus," the department said.

Changes in the capital and financial accounts reflect changes in the current account. In the first quarter net acquisitions of assets in the United States by foreigners exceeded U.S. residents' acquisitions of foreign assets by $112,755 million, down from an excess of $152,546 million in the fourth quarter, the report said.

"Financial outflows for U.S.-owned assets abroad increased and financial inflows for foreign-owned assets in the United States decreased," Commerce said.

U.S.-owned assets abroad went up $75,897 million in the first quarter, compared with an increase of $44,902 million in the fourth, with net U.S. purchases of foreign stocks and U.S. bank loans to foreigners up sharply, it said.

Foreign-owned assets in the United States went up $188,652 million in the first quarter, compared with an increase of $197,448 million in the fourth. Foreigners sold off more U.S. stocks and federally sponsored agency bonds than they bought in the first quarter. They increased their net purchases of U.S. corporate bonds and U.S. Treasury bonds.

The U.S. dollar depreciated 5 percent on a trade-weighted basis against a group of seven major currencies in the first quarter, the department said.

Following are some key figures:

U.S. CURRENT ACCOUNT
Millions of dollars, seasonally adjusted

year 3rd qtr 4th qtr 1st qtr
2002 2002 2002 2003
BALANCE ON:
Merchandise trade -482,872 -123,312 -132,241 -135,997
Services 64,834 16,332 16,125 14,430
Income -3,970 -1,747 2,966 2,571
Unilateral transfers -58,853 -13,997 -15,436 -17,116
-------- ------- ------- -------
Current account -480,861 -122,724 -128,586 -136,112

U.S. CAPITAL AND FINANCIAL ACCOUNT
Millions of dollars, seasonally adjusted

year 3rd qtr 4th qtr 1st qtr
2002 2002 2002 2003
NET CHANGE IN:
Capital account
transactions -1,285 -364 -358 -340
U.S. assets abroad
(an increase in
capital outflow
is -) -178,985 29,712 -44,902 -75,897
Foreign assets in U.S.
(an increase in
capital inflow
is +) 706,983 141,478 197,448 188,652

(Distributed by the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

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