International Financial Law Prof Blog

U.S. International Transactions: Current Account Deficit Widens by 52.9 Percent in Second Quarter

 

Current Account Balance, Second Quarter

The U.S. current account deficit, which reflects the combined balances on trade in goods and services and income flows between U.S. residents and residents of other countries, widened by $59.0 billion, or 52.9 percent, to $170.5 billion in the second quarter of 2020, according to statistics from the U.S. Bureau of Economic Analysis (BEA). The revised first quarter deficit was $111.5 billion.

The second quarter deficit was 3.5 percent of current dollar gross domestic product, up from 2.1 percent in the first quarter.

The $59.0 billion widening of the current account deficit in the second quarter mostly reflected an expanded deficit on goods and reduced surpluses on primary income and on services.

Coronavirus (COVID-19) Impact on Second Quarter 2020 International Transactions

All major categories of current account transactions declined in the second quarter of 2020 resulting in part from 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. In the financial account, the ending of some currency swaps between the U.S. Federal Reserve System and some central banks in Europe and Japan contributed to U.S. withdrawal of deposit assets and U.S. repayment of deposit liabilities. The full economic effects of the COVID-19 pandemic cannot be quantified in the statistics because the impacts are generally embedded in source data and cannot be separately identified. For more information on the impact of COVID-19 on the statistics, see the technical note that accompanies this release.

Current Account Transactions

Exports of goods and services to, and income received from, foreign residents decreased $209.3 billion, to $688.0 billion, in the second quarter. Imports of goods and services from, and income paid to, foreign residents decreased $150.2 billion, to $858.5 billion.

Trade in Goods 

Exports of goods decreased $114.6 billion, to $288.9 billion, mostly reflecting decreases in industrial supplies and materials, mainly petroleum and products; in capital goods, mainly civilian aircraft, engines, and parts; and in automotive vehicles, parts, and engines, mainly parts and engines and passenger cars. Imports of goods decreased $87.1 billion, to $508.2 billion, mostly reflecting decreases in automotive vehicles, parts, and engines, mainly parts and engines and passenger cars, and in industrial supplies and materials, mostly petroleum and products.

Trade in Services 

Exports of services decreased $46.3 billion, to $155.8 billion, and imports of services decreased $35.4 billion, to $101.3 billion. The decreases in both exports and imports mostly reflected decreases in travel, primarily other personal travel, and in transport, primarily air passenger transport.

Primary Income 

Receipts of primary income decreased $47.1 billion, to $209.4 billion, mostly reflecting decreases in portfolio investment income, primarily income on equity securities, and in direct investment income, primarily earnings. Payments of primary income decreased $24.3 billion, to $180.2 billion, reflecting decreases in all components, led by other investment income, primarily interest on loans and deposits.

Secondary Income

Receipts of secondary income decreased $1.2 billion, to $33.9 billion, mostly reflecting a decrease in private transfers, primarily private sector fines and penalties. Payments of secondary income decreased $3.4 billion, to $68.8 billion, reflecting decreases in private transfers, primarily private sector fines and penalties, and in general government transfers, primarily international cooperation.

Capital Account Transactions 

Capital transfer payments decreased $1.9 billion, to $1.1 billion, in the second quarter, mostly reflecting a decrease in investment grants.

Financial Account Transactions 

Net financial account transactions were −$82.6 billion in the second quarter, reflecting net U.S. borrowing from foreign residents.

Financial Assets 

Second quarter transactions decreased U.S. residents’ foreign financial assets by $147.6 billion. Transactions decreased portfolio investment assets by $29.8 billion, primarily equity securities, and other investment assets, mostly deposits, by $158.6 billion. Transactions in deposits included a net withdrawal by the U.S. Federal Reserve of $130.8 billion from deposits abroad. Transactions increased direct investment assets, primarily equity, by $35.9 billion, and reserve assets by $5.0 billion.

Liabilities 

Second quarter transactions decreased U.S. liabilities to foreign residents by $4.8 billion. Transactions decreased direct investment liabilities, mainly debt instruments, by $8.5 billion and other investment liabilities, mostly deposits, by $335.2 billion. Foreign banks withdrew $213.0 billion of their deposits in U.S. banks. Transactions increased portfolio investment liabilities, mainly short-term U.S. Treasury securities, by $339.0 billion.

Financial Derivatives 

Net transactions in financial derivatives were $60.3 billion in the second quarter, reflecting net lending to foreign residents.

Updates to First Quarter 2020 International Transactions Accounts Balances Billions of dollars, seasonally adjusted
	Preliminary estimate	Revised estimate
Current account balance	-104.2	−111.5
Goods balance	−192.3	−191.7
Services balance	73.3	65.3
Primary income balance	52.5	52.0
Secondary income balance	−37.6	−37.1
Net financial account transactions	−201.1	−143.1

*  *  *

Next release: December 18, 2020 at 8:30 A.M. EST

U.S. International Trade in Goods and Services, July 2020

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced that the goods and services deficit was $63.6 billion in July, up $10.1 billion from $53.5 billion in June, revised.

U.S. International Trade in Goods and Services Deficit

Deficit:	$63.6 Billion	+18.9%°
Exports:	$168.1 Billion	+8.1%°
Imports:	$231.7 Billion	+10.9%°
Next release: October 6, 2020 (°) Statistical significance is not applicable or not measurable. Data adjusted for seasonality but not price changes Source: U.S. Census Bureau, U.S. Bureau of Economic Analysis; U.S. International Trade in Goods and Services, September 3, 2020

Coronavirus (COVID-19) Impact on July 2020 International Trade in Goods and Services

Exports and imports increased in July but remained below pre-pandemic levels, reflecting the ongoing impact of COVID-19, as many businesses continued to operate at limited capacity or ceased operations completely, and the movement of travelers across borders remained restricted. The full economic effects of the COVID-19 pandemic cannot be quantified in the trade statistics because the impacts are generally embedded in source data and cannot be separately identified. The Census Bureau and the Bureau of Economic Analysis continue to monitor data quality and have determined estimates in this release meet publication standards. For more information, see the frequently asked questions on goods from the Census Bureau and on services from BEA.

Exports, Imports, and Balance (exhibit 1)

July exports were $168.1 billion, $12.6 billion more than June exports. July imports were $231.7 billion, $22.7 billion more than June imports.

The July increase in the goods and services deficit reflected an increase in the goods deficit of $9.3 billion to $80.9 billion and a decrease in the services surplus of $0.8 billion to $17.4 billion.

Year-to-date, the goods and services deficit increased $6.4 billion, or 1.8 percent, from the same period in 2019. Exports decreased $257.8 billion or 17.5 percent. Imports decreased $251.3 billion or 13.8 percent.

Three-Month Moving Averages (exhibit 2)

The average goods and services deficit increased $3.3 billion to $58.3 billion for the three months ending in July.

• Average exports increased $6.9 billion to $155.1 billion in July.
• Average imports increased $10.2 billion to $213.4 billion in July.

Year-over-year, the average goods and services deficit increased $6.9 billion from the three months ending in July 2019.

• Average exports decreased $55.7 billion from July 2019.
• Average imports decreased $48.8 billion from July 2019.

Exports (exhibits 3, 6, and 7)

Exports of goods increased $12.3 billion to $115.5 billion in July.

  Exports of goods on a Census basis increased $12.3 billion.

• Automotive vehicles, parts, and engines increased $3.8 billion.
  • Passenger cars increased $2.1 billion.
• Consumer goods increased $2.6 billion.
  • Gem diamonds increased $0.7 billion.
  • Artwork, antiques, and other collectibles increased $0.6 billion.
• Industrial supplies and materials increased $2.5 billion.
  • Crude oil increased $1.1 billion.
  • Other petroleum products increased $0.4 billion.
• Capital goods increased $2.5 billion.
  • Semiconductors increased $0.8 billion.
  • Civilian aircraft engines increased $0.5 billion.

  Net balance of payments adjustments decreased less than $0.1 billion.

Exports of services increased $0.4 billion to $52.6 billion in July.

• Other business services increased $0.3 billion.
• Transport increased $0.3 billion.
• Charges for the use of intellectual property increased $0.1 billion.
• Travel decreased $0.4 billion.

Imports (exhibits 4, 6, and 8)

Imports of goods increased $21.5 billion to $196.4 billion in July.

  Imports of goods on a Census basis increased $21.5 billion.

• Automotive vehicles, parts, and engines increased $7.7 billion.
  • Passenger cars increased $3.7 billion.
  • Automotive parts and accessories increased $2.5 billion.
• Industrial supplies and materials increased $4.4 billion.
  • Finished metal shapes increased $1.3 billion.
  • Nonmonetary gold increased $0.9 billion.
  • Crude oil increased $0.7 billion.
• Capital goods increased $4.1 billion.
  • Civilian aircraft increased $1.7 billion.
  • Electric apparatus increased $0.4 billion.
  • Generators and accessories increased $0.4 billion.
• Consumer goods increased $3.5 billion.
  • Cell phones and other household goods increased $1.7 billion.
  • Cotton apparel and household goods increased $0.7 billion.
  • Furniture and household items increased $0.7 billion.

  Net balance of payments adjustments increased $0.1 billion.

Imports of services increased $1.2 billion to $35.3 billion in July.

• Transport increased $0.5 billion.
• Travel increased $0.3 billion.
• Charges for the use of intellectual property increased $0.1 billion.
• Insurance services increased $0.1 billion.

Real Goods in 2012 Dollars – Census Basis (exhibit 11)

The real goods deficit increased $10.1 billion to $90.5 billion in July.

• Real exports of goods increased $13.1 billion to $133.7 billion.
• Real imports of goods increased $23.2 billion to $224.2 billion.

Revisions

Exports and imports of goods and services were revised for January through June 2020 to incorporate more comprehensive and updated quarterly and monthly data.

Revisions to June exports

• Exports of goods were revised up $0.3 billion.
• Exports of services were revised down $3.1 billion.

Revisions to June imports

• Imports of goods were revised down $0.2 billion.
• Imports of services were revised up $0.2 billion.

Goods by Selected Countries and Areas: Monthly – Census Basis (exhibit 19)

The July figures show surpluses, in billions of dollars, with South and Central America ($2.9), OPEC ($1.5), Hong Kong ($1.4), Brazil ($0.8), United Kingdom ($0.6), and Saudi Arabia ($0.3). Deficits were recorded, in billions of dollars, with China ($28.3), European Union ($13.1), Mexico ($11.5), Japan ($3.4), Germany ($3.0), Taiwan ($2.8), France ($2.5), India ($2.0), Italy ($1.8), South Korea ($1.5), Singapore ($1.0), and Canada ($0.5).

• The deficit with Mexico increased $2.5 billion to $11.5 billion in July. Exports increased $2.4 billion to $17.8 billion and imports increased $4.9 billion to $29.3 billion.
• The deficit with China increased $1.6 billion to $28.3 billion in July. Exports increased $0.1 billion to $9.5 billion and imports increased $1.7 billion to $37.8 billion.
• The surplus with South and Central America increased $1.2 billion to $2.9 billion in July. Exports increased $1.3 billion to $9.7 billion and imports increased $0.1 billion to $6.8 billion.

Goods and Services by Selected Countries and Areas: Quarterly – Balance of Payments Basis (exhibit 20)

Statistics on trade in goods and services by country and area are only available quarterly, with a one-month lag. With this release, second-quarter figures are now available.

The second-quarter figures show surpluses, in billions of dollars, with South and Central America ($13.0), OPEC ($6.4), United Kingdom ($4.0), Brazil ($3.4), Saudi Arabia ($1.9), Hong Kong ($1.6), Canada ($0.6), and Singapore ($0.2). Deficits were recorded, in billions of dollars, with China ($75.8), European Union ($24.8), Mexico ($15.0), Germany ($12.4), Japan ($6.9), Taiwan ($6.7), India ($6.4), Italy ($4.9), South Korea ($4.5), and France ($2.7).

• The deficit with China increased $21.4 billion to $75.8 billion in the second quarter. Exports increased $2.5 billion to $36.8 billion and imports increased $23.9 billion to $112.6 billion.
• The surplus with South and Central America decreased $8.1 billion to $13.0 billion in the second quarter. Exports decreased $21.9 billion to $46.4 billion and imports decreased $13.8 billion to $33.4 billion.
• The deficit with Mexico decreased $13.2 billion to $15.0 billion in the second quarter. Exports decreased $25.7 billion to $43.2 billion and imports decreased $38.9 billion to $58.2 billion.

BEA News: Gross Domestic Product, 2nd Quarter 2020 (Second Estimate); Corporate Profits, 2nd Quarter 2020 (Preliminary Estimate)

Real gross domestic product (GDP) decreased at an annual rate of 31.7 percent in the second quarter of 2020 (table 1), according to the "second" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP decreased 5.0 percent.

The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the decrease in real GDP was 32.9 percent. With the second estimate, private inventory investment and personal consumption expenditures (PCE) decreased less than previously estimated (see "Updates to GDP" on page 2).

Coronavirus (COVID-19) Impact on the Second-Quarter 2020 GDP Estimate

The decline in second quarter GDP reflected the response to COVID-19, as “stay-at-home” orders issued in March and April were partially lifted in some areas of the country in May and June, and government pandemic assistance payments were distributed to households and businesses. This led to rapid shifts in activity, as businesses and schools continued remote work and consumers and businesses canceled, restricted, or redirected their spending. The full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate for the second quarter of 2020 because the impacts are generally embedded in source data and cannot be separately identified. For more information, see the Technical Note.

The decrease in real GDP reflected decreases in PCE, exports, nonresidential fixed investment, private inventory investment, residential fixed investment, and state and local government spending that were partly offset by an increase in federal government spending. Imports, which are a subtraction in the calculation of GDP, decreased (table 2).

The decrease in PCE reflected decreases in services (led by health care) and goods (led by clothing and footwear). The decrease in exports primarily reflected a decrease in goods (led by capital goods). The decrease in nonresidential fixed investment primarily reflected a decrease in equipment (led by transportation equipment). The decrease in private inventory investment primarily reflected a decrease in retail (led by motor vehicle dealers). The decrease in residential investment primarily reflected a decrease in new single-family housing.

Real gross domestic income (GDI) decreased 33.1 percent in the second quarter, compared with a decrease of 2.5 percent in the first quarter. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, decreased 32.4 percent in the second quarter, compared with a decrease of 3.7 percent in the first quarter (table 1).

Current-dollar GDP decreased 33.3 percent, or $2.07 trillion, in the second quarter to a level of $19.49 trillion. In the first quarter, GDP decreased 3.4 percent, or $186.3 billion (table 1 and table 3).

The price index for gross domestic purchases decreased 1.5 percent in the second quarter, in contrast to an increase of 1.4 percent in the first quarter (table 4). The PCE price index decreased 1.8 percent, in contrast to an increase of 1.3 percent. Excluding food and energy prices, the PCE price index decreased 1.0 percent, in contrast to an increase of 1.6 percent.

More information on the source data that underlie the estimates is available in the "Key Source Data and Assumptions" file on BEA’s website.

Updates to GDP

In the second estimate, real GDP decreased 31.7 percent in the second quarter, an upward revision of 1.2 percentage points from the previous estimate issued last month. The revision primarily reflected upward revisions to private inventory investment and PCE. For more information, see the Technical Note. For information on updates to GDP, see the "Additional Information" section that follows.

	Advance Estimate	Second Estimate
	(Percent change from preceding quarter)
Real GDP	-32.9	-31.7
Current-dollar GDP	-34.3	-33.3
Real GDI	…	-33.1
Average of Real GDP and Real GDI	…	-32.4
Gross domestic purchases price index	-1.5	-1.5
PCE price index	-1.9	-1.8
PCE price index excluding food and energy	-1.1	-1.0

Updates to First-Quarter Wages and Salaries

In addition to presenting updated estimates for the second quarter, today's release presents revised estimates of first-quarter wages and salaries, personal taxes, and contributions for government social insurance, based on updated data from the BLS Quarterly Census of Employment and Wages program. Wages and salaries are now estimated to have increased $103.6 billion in the first quarter of 2020, a downward revision of $3.4 billion. Real GDI decreased 2.5 percent in the first quarter, unrevised from the previously published estimate.

Corporate Profits

Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) decreased $226.9 billion in the second quarter, compared with a decrease of $276.2 billion in the first quarter (table 10).

Profits of domestic financial corporations increased $39.5 billion in the second quarter, in contrast to a decrease of $42.2 billion in the first quarter. Profits of domestic nonfinancial corporations decreased $170.1 billion, compared with a decrease of $190.5 billion. Rest-of-the-world profits decreased $96.2 billion, compared with a decrease of $43.5 billion. In the second quarter, receipts decreased $139.7 billion, and payments decreased $43.4 billion.

EXIM Board Votes to Notify Congress of Two Potential Transactions Totaling $400 Million to Support an Estimated 1,700 U.S. Jobs, and American Small Business Exports

Transactions Could Support Jobs in California, Colorado, Connecticut, Georgia, Illinois, Iowa, Louisiana, Minnesota, Oklahoma, Pennsylvania, and Texas in the Oil and Gas Equipment and Services Industry  The Export-Import Bank of the United States (EXIM) Board of Directors today unanimously voted to notify the U.S. Congress, pursuant to the law, of its consideration of two transactions that would facilitate the authorization of a $350 million general facility and $50 million small business facility (SBF) for Petroleos Mexicanos (Pemex). If approved, the combined $400 million financing facilities would support an estimated 1,700 jobs in California, Colorado, Connecticut, Georgia, Illinois, Iowa, Louisiana, Minnesota, Oklahoma, Pennsylvania, and Texas in the oilfield services industry, which has faced difficulties as a result of the COVID-19 pandemic. EXIM received the applications from PEMEX for the facilities in March 2020.

The 2015-2019 lapse in EXIM’s Board quorum suspended the agency’s 76-year association with Pemex, Mexico’s state-owned oil company that conducts exploration, production, industrial processing and refining, logistics, and marketing. During the four-year absence of a Board quorum at EXIM, China sought to step into the breach to grow its influence in the region and pursued closer ties with Pemex, notwithstanding the company’s previous financings with EXIM.

These transactions will help fill in private sector financing gaps and provide certainty to an industry suffering in the current economic climate because of the global pandemic shutdown, as well as provide a valuable alternative to Chinese offerings. EXIM financing under these transactions also will facilitate the purchase of U.S. oil and gas equipment and services provided to approximately 21 oil and gas field projects.

“With today’s unanimous Board action to notify Congress of these potential transactions, EXIM is taking a step toward supporting more American jobs and small business exports and furthering our nation’s prosperity and security. In addition to being our neighbor, Mexico is the United States’ second-largest export market and third-largest trading market,” said EXIM President and Chairman of the Board Kimberly A. Reed. “In addition to supporting an estimated 1,700 jobs in 11 states across the United States, these authorizations would help counter financing competition from foreign export credit agencies, including from China, and reinforce to our allies and partners around the globe—including Mexico—that EXIM is open for business.”

“The EXIM Board of Directors has taken important steps to support American workers by voting to notify Congress of these transactions that would support 1,700 jobs nationwide,” said EXIM Board Member Spencer T. Bachus, III. “EXIM is fulfilling its purpose of by providing access to liquidity when commercial lenders are unable or unwilling to assume the risk.”

ABOUT EXIM:

EXIM is an independent federal agency that promotes and supports American jobs by providing competitive and necessary export credit to support sales of U.S. goods and services to international buyers. A robust EXIM can level the global playing field for U.S. exporters when they compete against foreign companies that receive support from their governments. EXIM also contributes to U.S. economic growth by helping to create and sustain hundreds of thousands of jobs in exporting businesses and their supply chains across the United States. In recent years, approximately 90 percent of the total number of the agency’s authorizations has directly supported small businesses. Since 1992, EXIM has generated more than $9 billion for the U.S. Treasury for repayment of U.S. debt.

Activities of U.S. Multinational Enterprises, 2018

Worldwide employment by U.S. multinational enterprises (MNEs) increased 1.4 percent to 43.0 million workers in 2018 from 42.4 million in 2017, according to statistics released by the Bureau of Economic Analysis on the operations and finances of U.S. parent companies and their foreign affiliates.

Employment in the United States by U.S. parents increased 2.1 percent to 28.6 million workers in 2018. U.S. parents accounted for 66.5 percent of worldwide employment by U.S. MNEs, up from 66.1 percent in 2017. Employment abroad by majority-owned foreign affiliates (MOFAs) of U.S. MNEs was nearly unchanged at 14.4 million workers and accounted for 33.5 percent of employment by U.S. MNEs worldwide.

U.S. parents accounted for 22.0 percent of total private industry employment in the United States. Employment by U.S. parents was largest in manufacturing and retail trade. Employment abroad by MOFAs was largest in China, the United Kingdom, Mexico, India, and Canada.

Worldwide current-dollar value added of U.S. MNEs increased 6.8 percent to $5.7 trillion. Value added by U.S. parents, a measure of their direct contribution to U.S. gross domestic product, increased 7.8 percent to $4.2 trillion, representing 23.3 percent of total U.S. private-industry value added. MOFA value added increased 4.1 percent to $1.5 trillion. Value added by MOFAs was largest in the United Kingdom, Canada, and Ireland.

Worldwide expenditures for property, plant, and equipment of U.S. MNEs increased 6.6 percent to $912.1 billion. Expenditures by U.S. parents accounted for $721.6 billion and MOFA expenditures for $190.4 billion.

Worldwide research and development expenditures of U.S. MNEs increased 6.9 percent to $381.4 billion. U.S. parents accounted for expenditures of $323.1 billion and MOFAs for $58.2 billion.

Additional statistics on the activities of U.S. parent companies and their foreign affiliates including sales, balance sheet and income statement items, compensation of employees, trade in goods, and more are available on BEA’s website. More industry detail for U.S. parents and more industry and country detail for foreign affiliates are also available on the website.

U.S. MNE Activities in the First Year After the Tax Cuts and Jobs Act (TCJA)

The TCJA generally eliminated taxes on dividends, or repatriated earnings, to U.S. multinationals from their foreign affiliates and changed the nominal U.S. domestic corporate tax rate from 35 percent to 21 percent beginning on January 1, 2018. BEA’s statistics cannot separate the effects of the TCJA from other prevalent economic conditions and company-specific factors in 2018, however, the statistics on the Activities of U.S. MNEs for 2018 in this release provide a first look at U.S. MNE activities in the year after the TCJA took effect.

U.S. parents grew faster than MOFAs in 2018 for several measures of their activities, including employment, value added, expenditures for property, plant, and equipment (PP&E), and research and development expenditures (R&D). This contrasts with the long-term trend of MOFA activities growth outpacing that of U.S. parents. In 2018, U.S. parents experienced above-average growth rates for these measures, while MOFAs grew at below-average rates.

Annual Percent Change in Activities of U.S. MNEs

U.S. Bureau of Economic Analysis
*1998-2018, rates for benchmark years (1999, 2004, 2009, and 2014) not included

In addition to the measures of MNE activities featured in this release, BEA’s U.S. MNE statistics include U.S. income taxes paid by U.S. parents. According to the statistics, U.S. income taxes paid by U.S. parents decreased 6.4 percent to $218.9 billion in 2018 (see Table I. P1). The effective U.S. income tax rate paid by U.S. parents decreased to 13.1 percent in 2018, following an effective rate of 15.4 percent in 2017 and between 18.4 and 22.3 percent for the five previous years.

BEA News: U.S. International Trade in Goods and Services, June 2020

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced yesterday that the goods and services deficit was $50.7 billion in June, down $4.1 billion from $54.8 billion in May, revised.

U.S. International Trade in Goods and Services Deficit

Deficit:	$50.7 Billion	-7.5%°
Exports:	$158.3 Billion	+9.4%°
Imports:	$208.9 Billion	+4.7%°
Next release: September 3, 2020 (°) Statistical significance is not applicable or not measurable. Data adjusted for seasonality but not price changes Source: U.S. Census Bureau, U.S. Bureau of Economic Analysis; U.S. International Trade in Goods and Services, August 5, 2020

Coronavirus (COVID-19) Impact on May 2020 International Trade in Goods and Services

Exports and imports increased in June following monthly declines since March that were, 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. The full economic effects of the COVID-19 pandemic cannot be quantified in the trade statistics for June because the impacts are generally embedded in source data and cannot be separately identified. The Census Bureau and the Bureau of Economic Analysis have monitored data quality and determined estimates in this release meet publication standards. For more information on the impact of COVID-19 on the statistics, see the frequently asked questions on goods from the Census Bureau and on services from BEA.

Exports, Imports, and Balance (exhibit 1)

June exports were $158.3 billion, $13.6 billion more than May exports. June imports were $208.9 billion, $9.5 billion more than May imports.

The June decrease in the goods and services deficit reflected a decrease in the goods deficit of $4.0 billion to $72.2 billion and an increase in the services surplus of $0.1 billion to $21.5 billion.

Year-to-date, the goods and services deficit decreased $23.1 billion, or 7.8 percent, from the same period in 2019. Exports decreased $199.1 billion or 15.7 percent. Imports decreased $222.3 billion or 14.2 percent.

Three-Month Moving Averages (exhibit 2)

The average goods and services deficit increased $2.8 billion to $51.8 billion for the three months ending in June.

• Average exports decreased $10.6 billion to $151.4 billion in June.
• Average imports decreased $7.9 billion to $203.1 billion in June.

Year-over-year, the average goods and services deficit increased $1.0 billion from the three months ending in June 2019.

• Average exports decreased $59.1 billion from June 2019.
• Average imports decreased $58.1 billion from June 2019.

Exports (exhibits 3, 6, and 7)

Exports of goods increased $13.0 billion to $102.9 billion in June.

  Exports of goods on a Census basis increased $12.9 billion.

• Automotive vehicles, parts, and engines increased $4.9 billion.
  • Automotive parts and accessories increased $1.8 billion.
  • Passenger cars increased $1.7 billion.
• Capital goods increased $3.8 billion.
  • Civilian aircraft increased $0.6 billion.
  • Other industrial machinery increased $0.6 billion
  • Telecommunications equipment increased $0.5 billion.
  • Electric apparatus increased $0.5 billion.
• Industrial supplies and materials increased $2.8 billion.
  • Fuel oil increased $0.8 billion.
  • Other petroleum products increased $0.5 billion.
  • Crude oil increased $0.4 billion.

  Net balance of payments adjustments increased $0.1 billion.

Exports of services increased $0.6 billion to $55.4 billion in June.

• Transport increased $0.4 billion.
• Other business services increased $0.1 billion.

Imports (exhibits 4, 6, and 8)

Imports of goods increased $9.0 billion to $175.0 billion in June.

  Imports of goods on a Census basis increased $8.5 billion.

• Automotive vehicles, parts, and engines increased $9.7 billion.
  • Passenger cars increased $4.1 billion.
  • Automotive parts and accessories increased $2.7 billion.
  • Trucks, buses, and special purpose vehicles increased $2.1 billion.
• Consumer goods increased $4.7 billion.
  • Cell phones and other household goods increased $1.1 billion.
  • Gem diamonds increased $0.7 billion.
  • Cotton apparel and household goods increased $0.5 billion.
  • Artwork and other collectibles increased $0.5 billion.
• Capital goods increased $2.2 billion.
  • Computers increased $0.8 billion.
  • Telecommunications equipment increased $0.4 billion.
  • Electric apparatus increased $0.4 billion.
• Industrial supplies and materials decreased $8.3 billion.
  • Nonmonetary gold decreased $5.9 billion.
  • Finished metal shapes decreased $2.9 billion.

  Net balance of payments adjustments increased $0.5 billion.

Imports of services increased $0.5 billion to $33.9 billion in June.

• Transport increased $0.3 billion.
• Other business services increased $0.1 billion.
• Charges for the use of intellectual property increased $0.1 billion.

Real Goods in 2012 Dollars – Census Basis (exhibit 11)

The real goods deficit decreased $5.2 billion to $81.0 billion in June.

• Real exports of goods increased $13.1 billion to $120.0 billion.
• Real imports of goods increased $7.8 billion to $201.0 billion.

Goods by Selected Countries and Areas: Monthly – Census Basis (exhibit 19)

The June figures show surpluses, in billions of dollars, with South and Central America ($1.8), United Kingdom ($1.3), Hong Kong ($1.0), OPEC ($0.5), and Brazil ($0.4). Deficits were recorded, in billions of dollars, with China ($26.7), European Union ($13.1), Mexico ($9.0), Germany ($3.8), Taiwan ($2.4), Italy ($2.1), South Korea ($1.9), Japan ($1.8), India ($1.7), France ($1.0), Saudi Arabia ($0.7), Singapore ($0.2), and Canada ($0.1).

• The deficit with Japan decreased $1.4 billion to $1.8 billion in June. Exports increased $0.2 billion to $4.9 billion and imports decreased $1.3 billion to $6.6 billion.
• The deficit with Singapore decreased $1.4 billion to $0.2 billion in June. Exports increased $0.3 billion to $2.1 billion and imports decreased $1.1 billion to $2.2 billion.
• The deficit with Mexico increased $4.8 billion to $9.0 billion in June. Exports increased $4.8 billion to $15.5 billion and imports increased $9.6 billion to $24.5 billion.

Direct Investment by Country and Industry, 2019

The U.S. direct investment abroad position, or cumulative level of investment, increased $158.6 billion to $5.96 trillion at the end of 2019 from $5.80 trillion at the end of 2018, according to statistics released by the Bureau of Economic Analysis (BEA). The increase reflected a $95.7 billion increase in the position in Europe, primarily in the United Kingdom and the Netherlands. By industry, manufacturing affiliates accounted for most of the increase.

The foreign direct investment in the United States position increased $331.2 billion to $4.46 trillion at the end of 2019 from $4.13 trillion at the end of 2018. The increase mainly reflected a $157.3 billion increase in the position from Asia and Pacific, primarily Japan. By industry, affiliates in manufacturing, finance and insurance, and wholesale trade accounted for the largest increases.

Continued Impact of the 2017 Tax Cuts and Jobs Act (TCJA) on U.S. Direct Investment Abroad

The TCJA generally eliminated taxes on dividends, or repatriated earnings, to U.S. multinationals from their foreign affiliates. In 2019, dividends decreased $454.5 billion to $396.3 billion from $850.9 billion in 2018, but were still more than twice the average annual dividends from the 10 years prior to the TCJA. By country, more than half of the dividends in 2019 were repatriated from affiliates in three countries: Ireland ($85.8 billion), the Netherlands ($74.3 billion), and Bermuda ($67.9 billion) (table 3). By industry, U.S. multinationals in chemical manufacturing ($99.6 billion) and computers and electronic products manufacturing ($92.5 billion) repatriated nearly half of all dividends in 2019 (table 4).

U.S. direct investment abroad (tables 1 – 6)

U.S. multinational enterprises (MNEs) invest in nearly every country, but their investment in affiliates in five countries accounted for more than half of the total position at the end of 2019. The U.S. direct investment abroad position remained the largest in the Netherlands at $860.5 billion, followed by the United Kingdom ($851.4 billion) and Luxembourg ($766.1 billion). Canada ($402.3 billion) moved up one position from 2018 to be the fourth largest host economy, moving Ireland ($354.9 billion) into fifth.

By industry of the directly-owned foreign affiliate, investment was highly concentrated in holding companies, which accounted for nearly half of the overall position in 2019. Most holding company affiliates, which are owned by U.S. parents from a variety of industries, own other foreign affiliates that operate in a variety of industries. By industry of the U.S. parent, investment by manufacturing MNEs accounted for 51.9 percent of the position, followed by MNEs in finance and insurance (12.8 percent).

U.S. MNEs earned income of $532.7 billion in 2019 on their cumulative investment abroad, a 2.1 percent decrease from 2018.

Foreign direct investment in the United States (tables 7 – 10)

By country of the foreign parent, five countries accounted for more than half of the total position at the end of 2019. Japan moved up one position from 2018 to be the top investing country in 2019 with a position of $619.3 billion, moving the United Kingdom ($505.1 billion) to second. Canada ($495.7 billion) and Netherlands ($487.1 billion) switched places as the third and fourth largest investing countries. Germany ($372.9 billion) remained the fifth largest investing country at the end of 2019.

By country of the ultimate beneficial owner (UBO), the top five countries in terms of position were Japan ($644.7 billion), Canada ($580.8 billion), Germany ($522.0 billion), the United Kingdom ($446.2 billion), and Ireland ($343.5 billion). On the UBO basis, investment from the Netherlands and Luxembourg was much lower than by country of foreign parent, indicating that much of the investment from foreign parents in these countries was ultimately owned by investors in other countries.

Foreign direct investment in the United States was concentrated in the U.S. manufacturing sector, which accounted for 40.1 percent of the position. There was also sizable investment in finance and insurance (12.3 percent) and wholesale trade (10.5 percent).

Foreign MNEs earned income of $208.1 billion in 2019 on their cumulative investment in the United States, a 0.8 percent increase from 2018.

BEA Announcement: Trade in Services Tables Now Available

Please select a table to display or download all data for tables. You may also view a definition of International Services and geographic area definitions.

Legend: (A) Annual; (MNEs) Multinational Enterprises; (MOFAs) Majority-owned foreign affiliates; (MOUSAs) Majority-owned U.S. affiliates; (UBO) Ultimate beneficial owner; (ICT) Information and Communications Technology

Table 1.1. Services Supplied to Foreign and U.S. Persons Through Trade and Through Affiliates ((A) (1986-2019))

U.S. Trade in Services

Table 2.1. U.S. Trade in Services, by Type of Service ((A) (1999-2019))

Table 2.2. U.S. Trade in Services, by Type of Service and by Country or Affiliation ((A) (1999-2019))

Table 2.3. U.S. Trade in Services, by Country or Affiliation and by Type of Service ((A) (1999-2019))

Table 3.1. U.S. Trade in ICT and Potentially ICT-Enabled Services, by Type of Service ((A) (1999-2019))

Table 3.2. U.S. Trade in ICT and Potentially ICT-Enabled Services, by Type of Service and by Affiliation ((A) (1999-2019))

Table 3.3. U.S. Trade in ICT and Potentially ICT-Enabled Services, by Country or Affiliation ((A) (2006-2019))

Services Supplied Through Affiliates

Table 4.1. Services Supplied to Foreign Persons by U.S. MNEs Through Their MOFAs, by Industry of Affiliate and by Country of Affiliate ((A) (2004-2017))

Table 4.2. Services Supplied to Foreign Persons by U.S. MNEs Through Their MOFAs, by Country of Affiliate and by Destination ((A) (2004-2017))

Table 4.3. Services Supplied to Foreign Persons by U.S. MNEs Through Their MOFAs, by Industry of Affiliate and by Destination ((A) (2009-2017))

Table 4.4. Services Supplied to Foreign Persons by U.S. MNEs Through Their MOFAs, by Country of Affiliate and by Industry of Affiliate ((A) (2009,2013-2017))

Table 5.1. Services Supplied to U.S. Persons by Foreign MNEs Through Their MOUSAs, by Industry of Affiliate and by Country of UBO ((A) (2002-2017))

Table 5.2. Services Supplied to U.S. Persons by Foreign MNEs Through Their MOUSAs, by Country of UBO ((A) (2002-2017))

Table 5.3. Services Supplied to U.S. Persons by Foreign MNEs Through Their MOUSAs, by Industry of Affiliate ((A) (2002-2017))

Table 5.4. Services Supplied to U.S. Persons by Foreign MNEs Through Their MOUSAs, by Country of UBO and by Industry of Affiliate ((A) (2013-2017))

Characteristics of Firms that Trade Services

Table 6.1. U.S. Trade in Selected Services, by Major Industry and by Service Type ((A) (2008-2017))

Table 6.2. U.S. Trade in Selected Services, by Service Type and by Firm Type ((A) (2008-2017))

Teleworking is Not Working for the Poor, the Young, and the Women

By Mariya Brussevich, Era Dabla-Norris, and Salma Khalid

The COVID-19 pandemic is devastating labor markets across the world. Tens of millions of workers lost their jobs, millions more out of the labor force altogether, and many occupations face an uncertain future. Social distancing measures threaten jobs requiring physical presence at the workplace or face-to-face interactions. Those unable to work remotely, unless deemed essential, face a significantly higher risk of reductions in hours or pay, temporary furloughs, or permanent layoffs. What types of jobs and workers are most at risk? Not surprisingly, the costs have fallen most heavily on those who are least able to bear them: the poor and the young in the lowest-paid jobs.

In a new paper Who will Bear the Brunt of Lockdown Policies? Evidence from Tele-workability Measures Across Countries, we investigate the feasibility to work from home in a large sample of advanced and emerging market economies. We estimate that nearly 100 million workers in 35 advanced and emerging countries (out of 189 IMF members) could be at high risk because they are unable to do their jobs remotely. This is equivalent to 15 percent of their workforce, on average. But there are important differences across countries and workers.

Summary: Lockdowns imposed around the world to contain the spread of the COVID-19 pandemic are having a differential impact on economic activity and jobs. This paper presents a new index of the feasibility to work from home to investigate what types of jobs are most at risk. We estimate that over 97.3 million workers, equivalent to about 15 percent of the workforce, are at high risk of layoffs and furlough across the 35 advanced and emerging countries in our sample. Workers least likely to work remotely tend to be young, without a college education, working for non-standard contracts, employed in smaller firms, and those at the bottom of the earnings distribution, suggesting that the pandemic could exacerbate inequality. Crosscountry heterogeneity in the ability to work remotely reflects differential access to and use of technology, sectoral mix, and labor market selection. Policies should account for demographic and distributional considerations both during the crisis and in its aftermath.

Series: Working Paper No. 20/88

The nature of jobs in each country

Most studies measuring the feasibility of working from home follow job definitions used in the United States. But the same occupations in other countries may differ in the face-to-face interactions required, the technology intensity of the production process, or even access to digital infrastructure. To reflect that, the work-from-home feasibility index that we built uses the tasks actually performed within each country, according to surveys compiled by the OECD for 35 countries.

We found significant differences across countries even for the same occupations. It is much easier to telework in Norway and Singapore than in Turkey, Chile, Mexico, Ecuador, and Peru, simply because more than half the households in most emerging and developing countries don’t even have a computer at home.

How to protect the most vulnerable?

The pandemic is likely to change how work is done in many sectors. Consumers may rely more on e-commerce, to the detriment of retail jobs; and may order more takeout, reducing the labor market for restaurant workers.

What can governments do? They can focus on assisting the affected workers and their families by broadening social insurance and safety nets to cushion against income and employment loss. Wage subsidies and public-works programs can help them regain their livelihoods during the recovery.

To reduce inequality and give people better prospects, governments need to strengthen education and training to better prepare workers for the jobs of the future. Lifelong learning also means bolstering access to schooling and skills training to help workers displaced by economic shocks like COVID-19.

This crisis has clearly shown that being able to get online was a crucial determinant to people’s ability to continue engaging in the workplace. Investing in digital infrastructure and closing the digital divide will allow disadvantaged groups to participate meaningfully in the future economy.

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New Foreign Direct Investment in the United States, 2019

Expenditures by foreign direct investors to acquire, establish, or expand U.S. businesses totaled $194.7 billion (preliminary) in 2019. Expenditures were down 37.7 percent from $312.5 billion (revised) in 2018 and below the annual average of $333.0 billion for 2014–2018. As in previous years, acquisitions of existing businesses accounted for a large majority of total expenditures.

In 2019, expenditures for acquisitions were $190.7 billion, expenditures to establish new U.S. businesses were $2.5 billion, and expenditures to expand existing foreign-owned businesses were $1.5 billion. Planned total expenditures, which include both first year and planned future expenditures, were $203.6 billion.

Expenditures by industry, country, and state in 2019

By industry, expenditures for new direct investment were largest in manufacturing, at $78.2 billion, accounting for 40.2 percent of total expenditures. Within manufacturing, expenditures were largest in chemical manufacturing ($41.8 billion), primarily pharmaceuticals and medicines. There were also notable expenditures in transportation and warehousing ($21.3 billion) and publishing industries ($14.5 billion).

By country of ultimate beneficial owner (UBO), the largest investing country was the United Kingdom, with expenditures of $40.4 billion. Canada ($35.7 billion) was the second largest investing country, followed by Germany ($21.6 billion) and Japan ($17.8 billion). By region, Europe contributed over half of new investment in 2019.

By U.S. state, California received the largest investment, with expenditures of $22.7 billion, followed by Pennsylvania ($21.1 billion) and Texas ($20.9 billion).

Greenfield expenditures

Greenfield investment expenditures—expenditures to either establish a new U.S. business or to expand an existing foreign-owned U.S. business—were $4.0 billion in 2019. Total planned expenditures until completion for greenfield investment initiated in 2019, which include both first year and future expenditures, were $12.9 billion.

By U.S. industry, greenfield expenditures in 2019 were largest in chemical manufacturing ($0.6 billion) and utilities ($0.5 billion). By country of UBO, Japan ($1.1 billion) and Canada ($1.0 billion) had the largest expenditures. By U.S. state, Delaware received the highest level of greenfield investment ($0.7 billion), followed by Texas ($0.6 billion).

Employment by newly acquired, established, or expanded foreign-owned businesses

In 2019, employment at newly acquired, established, or expanded foreign-owned businesses in the United States was 210,600 employees. Current employment of acquired enterprises was 208,100. Total planned employment, which includes the current employment of acquired enterprises, the planned employment of newly established business enterprises when fully operational, and the planned employment associated with expansions, was 223,400.

By industry, construction accounted for the largest number of employees (18,800), followed by food manufacturing (17,600). By country of UBO, the United Kingdom Islands in the Caribbean, which include the British Virgin Islands and Cayman Islands, accounted for the largest number of employees (35,400), followed by the United Kingdom (29,100) and Canada (28,700).

By U.S. state, Minnesota had the largest employment (39,800), followed by Texas (29,000) and California (21,800). Employment for an acquired entity that operated in multiple states is attributed to the state in which it had the greatest number of employees.

Updates to 2018 Expenditures for New Foreign Direct Investment in the United States
Billions of dollars

	Previously Published Estimate	Revised Estimate
First-year expenditures	296.4	312.5
U.S. businesses acquired	287.3	303.3
U.S. businesses established	5.3	4.9
U.S. businesses expanded	3.8	4.2
Planned total expenditures	318.1	340.0
U.S. businesses acquired	287.3	303.3
U.S. businesses established	20.3	22.7
U.S. businesses expanded	10.5	13.9

Next release: July 2021
New Foreign Direct Investment in the United States, 2020

U.S. International Trade in Goods and Services, May 2020

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced that the goods and services deficit was $54.6 billion in May, up $4.8 billion from $49.8 billion in April, revised.

U.S. International Trade in Goods and Services Deficit

Deficit:	$54.6 Billion	+9.7%°
Exports:	$144.5 Billion	-4.4%°
Imports:	$199.1 Billion	-0.9%°
Next release: August 5, 2020 (°) Statistical significance is not applicable or not measurable. Data adjusted for seasonality but not price changes Source: U.S. Census Bureau, U.S. Bureau of Economic Analysis; U.S. International Trade in Goods and Services, July 2, 2020

Coronavirus (COVID-19) Impact on May 2020 International Trade in Goods and Services

The declines in exports and imports that continued in May were, 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. The full economic effects of the COVID-19 pandemic cannot be quantified in the trade statistics for May because the impacts are generally embedded in source data and cannot be separately identified. The Census Bureau and the Bureau of Economic Analysis have monitored data quality and determined estimates in this release meet publication standards. For more information on the impact of COVID-19 on the statistics, see the frequently asked questions on goods from the Census Bureau and on services from BEA.

Exports, Imports, and Balance (exhibit 1)

May exports were $144.5 billion, $6.6 billion less than April exports. May imports were $199.1 billion, $1.8 billion less than April imports.

The May increase in the goods and services deficit reflected an increase in the goods deficit of $4.2 billion to $76.1 billion and a decrease in the services surplus of $0.6 billion to $21.5 billion.

Year-to-date, the goods and services deficit decreased $22.3 billion, or 9.1 percent, from the same period in 2019. Exports decreased $148.3 billion or 14.0 percent. Imports decreased $170.6 billion or 13.1 percent.

Three-Month Moving Averages (exhibit 2)

The average goods and services deficit increased $6.6 billion to $48.9 billion for the three months ending in May.

• Average exports decreased $22.4 billion to $161.9 billion in May.
• Average imports decreased $15.8 billion to $210.8 billion in May.

Year-over-year, the average goods and services deficit decreased $0.9 billion from the three months ending in May 2019.

• Average exports decreased $49.8 billion from May 2019.
• Average imports decreased $50.7 billion from May 2019.

Exports (exhibits 3, 6, and 7)

Exports of goods decreased $5.5 billion to $90.0 billion in May.

  Exports of goods on a Census basis decreased $5.6 billion.

• Industrial supplies and materials decreased $3.9 billion.
  • Other petroleum products decreased $1.6 billion.
  • Crude oil decreased $0.7 billion.
  • Fuel oil decreased $0.6 billion.
• Capital goods decreased $0.9 billion.
  • Semiconductors decreased $0.4 billion.
  • Computer accessories decreased $0.3 billion.

  Net balance of payments adjustments increased $0.1 billion.

Exports of services decreased $1.1 billion to $54.5 billion in May.

• Other business services decreased $0.6 billion.
• Financial services decreased $0.2 billion.
• Charges for the use of intellectual property decreased $0.2 billion.

Imports (exhibits 4, 6, and 8)

Imports of goods decreased $1.3 billion to $166.0 billion in May.

  Imports of goods on a Census basis decreased $1.0 billion.

• Automotive vehicles, parts, and engines decreased $4.4 billion.
  • Passenger cars decreased $3.0 billion.
  • Automotive parts and accessories decreased $0.6 billion.
  • Trucks, buses, and special purpose vehicles decreased $0.4 billion.
• Capital goods decreased $0.6 billion.
  • Computers decreased $0.4 billion.
• Industrial supplies and materials increased $2.3 billion.
  • Nonmonetary gold increased $1.2 billion.
  • Finished metal shapes increased $1.2 billion.
• Consumer goods increased $1.9 billion.
  • Other textile apparel and household goods increased $1.8 billion.
  • Cell phones and other household goods increased $1.2 billion.

  Net balance of payments adjustments decreased $0.3 billion.

Imports of services decreased $0.5 billion to $33.1 billion in May.

• Charges for the use of intellectual property decreased $0.2 billion.
• Other business services decreased $0.1 billion.
• Travel decreased $0.1 billion.
• Financial services decreased $0.1 billion.

Real Goods in 2012 Dollars – Census Basis (exhibit 11)

The real goods deficit increased $6.0 billion to $86.5 billion in May.

• Real exports of goods decreased $6.7 billion to $106.8 billion.
• Real imports of goods decreased $0.7 billion to $193.3 billion.

Goods by Selected Countries and Areas: Monthly – Census Basis (exhibit 19)

The May figures show surpluses, in billions of dollars, with South and Central America ($1.9), Brazil ($0.4), OPEC ($0.4), United Kingdom ($0.2), and Hong Kong ($0.1). Deficits were recorded, in billions of dollars, with China ($27.9), European Union ($12.7), Mexico ($4.2), Germany ($3.9), Japan ($3.2), Taiwan ($2.6), South Korea ($1.9), Singapore ($1.6), Italy ($1.4), Canada ($1.2), France ($1.1), India ($0.7), and Saudi Arabia ($0.1).

• The deficit with China increased $1.9 billion to $27.9 billion in May. Exports increased $0.7 billion to $10.0 billion and imports increased $2.7 billion to $37.9 billion.
• The surplus with members of OPEC decreased $1.0 billion to $0.4 billion in May. Exports decreased $0.5 billion to $2.4 billion and imports increased $0.5 billion to $2.1 billion.
• The deficit with the European Union decreased $1.6 billion to $12.7 billion in May. Exports decreased $1.0 billion to $14.9 billion and imports decreased $2.6 billion to $27.6 billion.

IMF's State of the Global Economy as of July 2, 2020

Last week we released our World Economic Outlook Update for June, which downgraded the April forecast—pegging global growth at -4.9 percent this year, down from -3 percent in April. Next year’s growth is forecast to be 5.4 percent.  Discussing these figures and more, Managing Director Kristalina Georgieva spoke to Financial Times Africa Editor David Pilling in a new 23-min video interview about the economic uncertainty caused by the coronavirus crisis, how Africa is in danger after a period of growth, and how the IMF is supporting countries through this crisis. For a look at the global outlook for the business community, take some time and watch MD Georgieva's recent 45-min conversation with the Harvard Business Review. And for a more detailed discussion on how COVID-19 has upended the global economy across the board, watch a new 50-min interview with Chief Economist Gita Gopinath—hosted earlier this week—by the Center for Strategic & International Studies. OUTLOOK FOR LATIN AMERICA AND THE CARIBBEAN Latin America and the Caribbean have become the new COVID-19 global epicenter. The human cost has been tragic, with over 100,000 lives lost. The economic toll has also been steep. Our World Economic Outlook Update now estimates the region to shrink by 9.4 percent in 2020, four percentage points worse than the April projection and the worst recession on record. A mild recovery to +3.7 percent is projected in 2021.  The rates of COVID-19 infections and deaths per capita are approaching those in Europe and the United States, with the total number of cases accounting for about 25 percent of the worldwide total. Against this backdrop, countries should be very cautious when considering reopening their economies and allow science and data to guide the process. Indeed, many countries in the region have high levels of informality and low preparedness to handle new outbreaks, like a high occupancy of intensive care unit beds and low testing and tracing capacity. Click here to read the full blog by Director of the Western Hemisphere Department Alejandro Werner, which includes several charts visualizing the impact of COVID-19 on the region and three policy priorities for how best to proceed. There are also specific insights with respect to Argentina, Brazil, Chile, Colombia, Mexico, Peru, Central America, Panama & the Dominican Republic, as well as the Caribbean. ASIA'S REOPENING AND RECOVERY For the first time in living memory, Asia’s growth is expected to contract by 1.6 percent—a downgrade to the April projection of zero growth. While Asia’s economic growth in the first quarter of 2020 was better than projected in the April World Economic Outlook—partly owing to early stabilization of the virus in some—projections for 2020 have been revised down for most of the countries in the region due to weaker global conditions and more protracted containment measures in several emerging economies. In the absence of a second wave of infections and with unprecedented policy stimulus to support the recovery, growth in Asia is projected to rebound strongly to 6.6 percent in 2021. But even with this fast pickup in economic activity, output losses due to COVID-19 are likely to persist. We project Asia’s economic output in 2022 to be about 5 percent lower compared with the level predicted before the crisis; and this gap will be much larger if we exclude China, where economic activity has already started to rebound. Our projections for 2021 and beyond assume a strong rebound in private demand; however, this may be optimistic for several reasons: slower growth in trade, longer than expected lockdowns, rising inequality, and both weak balance sheets and geopolitical tensions. Click here to read the full blog by Director of the Asia and Pacific Department Chang Yong Rhee, which also details key policies that would support the region's recovery. LESSONS FROM VIETNAM ON CONTAINING COVID-19 At the outset, it was expected to be an uphill battle. Vietnam was regarded as highly vulnerable, given its long border and extensive trade with China, densely populated urban areas, and limited healthcare infrastructure. But Vietnam’s cost-effective containment strategy resulted in only 352 confirmed cases and no deaths in a population of almost 100 million people. The country was among the first to lift virtually all domestic containment measures. Vietnam’s successful strategy was informed by its experience with previous outbreaks, like the Severe Acute Respiratory Syndrome, or SARS, in 2003. Early on, the Prime Minister prioritized health above economic concerns. The strategy was swiftly deployed with the help of the military, public security services, and grass-root organizations, which speaks to some features unique to Vietnam. Effective and transparent communications won the population’s buy-in, and contains broader lessons for developing countries. Click here to read more in IMF Country Focus. Have your headphones? Listen to a new 14-minute podcast with IMF economists Era Dabla-Norris and Anne-Marie Gulde of the Asia Pacific Department on why Vietnam's approach should allow for a quicker rebound. SUB-SAHARAN AFRICA’S SHARPEST ECONOMIC DECLINE SINCE THE 1970'S In our latest Regional Economic Outlook for sub-Saharan Africa, Real GDP is now forecast to contract by 3.2 percent, double the contraction predicted in April. On average, per capita incomes across the region will fall by 5.5 percent in 2020, back to levels last seen nearly a decade ago. This will likely lead to more poverty and widen income inequality as lockdowns disproportionally affect informal sector workers and small- and medium-sized companies in the services sectors. Regional policies should remain focused on safeguarding public health, supporting people and businesses hardest hit by the crisis, and facilitating the recovery. For example, shortly after the region’s 100th case on March 15, many country authorities proactively implemented strict containment measures to control the COVID-19 outbreak. These measures led to more people staying home and reducing daily movements to areas with services and recreational facilities, including the informal economy. The growth of new cases has slowed somewhat since, and a number of countries have cautiously eased some of their containment measures. But region-wide, the pandemic is still in its exponential phase with more than a quarter of a million confirmed cases, and infection cases doubling every 2-3 weeks. Click here to view six charts that tell a visual story of how COVID-19 has impacted sub-Saharan Africa. For more, you can download the report, read the press release and watch the 30-min Q&A press conference. If you're wondering what impact COVID-19 has had specifically on Africa's energy sector, I would encourage you to read this speech from earlier this week by Director of the African Department Abebe Aemro Selassie to the IEA Africa Ministerial Roundtable. OUTLOOK FOR THE MIDDLE EAST AND CENTRAL ASIA The Gulf states' economies could contract by 7.6 percent this year in their deepest decline in decades, as COVID-19 and low oil prices take their toll. The new IMF projection for the six-nation Gulf Cooperation Council (GCC) is dramatically worse than the 2.7 percent contraction we forecast just two months ago. Oil revenues in the GCC, which supply nearly a fifth of the world's crude, are also expected to decline by $200 billion in 2020, said Director of the Middle East and Central Asia Department Jihad Azour in a virtual economic forum on the prospects for recovery in the region. However, Azour predicted a faster rebound in 2021 as Gulf economies grow by 2.5 percent—a full 10 percent turnaround—but that the sharp drop in oil prices and the impact of the pandemic would lead to more debt in GCC economies. Last week, the IMF projected the Saudi economy, the largest in the region, would shrink by 6.8 percent—the lowest growth in more than three decades. A more detailed regional economic outlook will be released in the coming weeks. If you're wondering about the outlook for Central Asia given the crisis, watch this just-released 15-min interview between Jihad Azour with Lyazzat Shatayeva of Kazakh TV. A NEW INDEX OF DIGITAL FINANCIAL INCLUSION The pandemic could be a game changer for digital financial services. Low-income households and small firms can benefit greatly from advances in mobile money, fintech services, and online banking. Financial inclusion as a result of digital financial services can also boost economic growth. While the pandemic is set to increase use of these services, it has also posed challenges for the growth of the industry’s smaller players and highlighted unequal access to digital infrastructure. Many countries (for example, Liberia, Ghana, Kenya, Kuwait, Myanmar, Paraguay and Portugal) are supporting this shift with measures such as lowering fees and increasing limits on mobile money transactions. Moreover, in a new study, we introduce a new index of digital financial inclusion that measures the progress in 52 emerging market and developing economies. We found that digitalization increased financial inclusion between 2014 and 2017, even where financial inclusion through traditional banking services was declining. This is likely to have progressed more since then. For more details, click here to read the full blog by the IMF's Ulric Eriksson von Allmen, Purva Khera, Sumiko Ogawa, and Ratna Sahay.  Still, Internet usage remains a luxury: half of the world’s population does not have access to the Internet, either through a mobile device or through fixed line broadband. Countries in sub-Saharan Africa, followed by many in emerging and developing economies in Asia, are among those with the lowest access to the Internet despite being world leaders in mobile money transactions. There is also a large variation in Internet connectivity by firms in sub-Saharan Africa—only about 60 percent of businesses use email for business compared to about 85 percent in Europe and Central Asia. For more, view our latest Chart of the Week on Internet inequality. REMITTANCES TO FALL BY $100 BILLION IN 2020 COVID-19 is crippling the economies of rich and poor countries alike. Yet for many low-income and fragile states, the economic shock will be magnified by the loss of remittances, which represent a lifeline that supports households as well as provides much-needed tax revenue. In a new article for F&D, Deputy Managing Director Antoinette Sayeh and Assistant Director in the Institute for Capacity Development Ralph Chami dig deeper into how the pandemic threatens to dry up this vital source of income, and what measures can be taken to tackle this challenge. As of 2018, remittance flows to low-income and fragile states reached $350 billion, surpassing foreign direct investment, portfolio investment, and foreign aid as the single most important source of income from abroad. A drop in remittance flows is likely to heighten economic, fiscal, and social pressures on governments of these countries already struggling to cope even in normal times. And according to the World Bank, remittance flows are expected to drop by about $100 billion in 2020, which represents roughly a 20 percent drop from their 2019 level.  Read the full article here with plenty of charts. Prefer the PDF? Click here to download. And if you're in a listening mood, click here for a new 18-min podcast with author Ralph Chami. IMF AND COVID-19 We just updated our global policy tracker to help our member countries be more aware of the experiences of others in combating COVID-19, and we are regularly updating our lending tracker, which visualizes the latest emergency financial assistance and debt relief to member countries approved by the IMF’s Executive Board. To date, 72 countries will have been approved for emergency financing, totaling about US$25.3 billion. Looking for our latest Q&A about the IMF's response to COVID-19? Click here. We are also continually producing a special series of notes—around 50 to date—by IMF experts to help members address the economic effects of COVID-19 on a range of topics including fiscal, legal, statistical, tax and more. The most recent additions include a focus on food markets during COVID-19, budgeting in crisis, and digital financial services and the pandemic.  FINAL THOUGHT Thank you again very much for your interest in the Weekend Read. We really appreciate your time. If you have any questions, comments or feedback of any kind, please do write me a note. And if you're on LinkedIn, subscribe to this newsletter in a more  visual format. Have a safe weekend,

Rahim Kanani Editor, IMF Weekend Read rkanani@IMF.org / LinkedIn P.S. If you're a young person interested in learning more about the IMF, check out our new page dedicated to youth dialogue and engagement. You'll find articles, videos and other resources on climate change, fintech, gender equality and more, as well as economic explainers on issues like social spending and corruption.

U.S. International Investment Position, First Quarter 2020, Year 2019, and Annual Update

First Quarter 2020

The U.S. net international investment position, the difference between U.S. residents’ foreign financial assets and liabilities, was –$12.06 trillion at the end of the first quarter of 2020, according to statistics released by the U.S. Bureau of Economic Analysis (BEA). Assets totaled $26.77 trillion and liabilities were $38.82 trillion.

At the end of the fourth quarter of 2019, the net investment position was –$11.05 trillion (Table 1).

The –$1.01 trillion change in the net investment position from the fourth quarter of 2019 to the first quarter of 2020 came from net financial transactions of –$184.2 billion and net other changes in position, such as price and exchange rate changes, of –$822.8 billion (Table A).

Coronavirus (COVID-19) Impact on First Quarter 2020 International Investment Position

In the first quarter of 2020, the declines in U.S. assets and liabilities reflect the impact of the COVID-19 pandemic. The disruption to global production and financial markets led to sharp declines in global stock prices, the appreciation of the U.S. dollar against most foreign currencies, and a shortage of U.S. dollar liquidity in foreign money markets. The stock price declines and the appreciation of the U.S. dollar are reflected in price changes and exchange rate changes. Currency swap transactions between the U.S. Federal Reserve System and several foreign central banks to alleviate the shortage of U.S. dollar liquidity contributed to record levels of U.S. acquisition of assets and U.S. incurrence of liabilities. The full economic effects of the COVID-19 pandemic cannot be quantified in the statistics for the first quarter because the impacts are generally embedded in source data and cannot be separately identified. For more information on the currency swaps, see the technical note that accompanied the June 19 international transactions accounts news release.

Table A. Quarterly Change in the U.S. Net International Investment Position
Billions of dollars, not seasonally adjusted

	Position, 2019 Q4	Change in position in 2020 Q1			Position, 2020 Q1
		Total	Attributable to:
			Financial transactions	Other changes in position 1
U.S. net international investment position	-11,050.5	-1,007.0	-184.2	-822.8	-12,057.5
Net position excluding financial derivatives	-11,070.7	-1,022.1	-162.4	-859.8	-12,092.8
Financial derivatives other than reserves, net	20.2	15.2	-21.8	37.0	35.3
U.S. assets	29,152.8	-2,385.7	(2)	(2)	26,767.1
Assets excluding financial derivatives	27,362.4	-3,595.8	739.9	-4,335.7	23,766.6
Financial derivatives other than reserves	1,790.4	1,210.1	(2)	(2)	3,000.5
U.S. liabilities	40,203.3	-1,378.7	(2)	(2)	38,824.6
Liabilities excluding financial derivatives	38,433.0	-2,573.6	902.3	-3,475.9	35,859.4
Financial derivatives other than reserves	1,770.3	1,194.9	(2)	(2)	2,965.2
1. Disaggregation of other changes in position into price changes, exchange rate changes, and other changes in volume and valuation is only presented for annual statistics (see table B and table 2 in this release). 2. Financial transactions and other changes in financial derivatives positions are available only on a net basis; they are not separately available for U.S. assets and U.S. liabilities.

U.S. assets decreased by $2.39 trillion, to a total of $26.77 trillion, at the end of the first quarter, mostly reflecting decreases in portfolio investment and direct investment assets that were partly offset by increases in financial derivatives and in other investment assets. Portfolio investment assets decreased by $2.39 trillion, to $10.99 trillion, and direct investment assets decreased by $1.82 trillion, to $6.98 trillion, reflecting sharp decreases in foreign stock prices and the depreciation of major foreign currencies against the U.S. dollar that lowered the value of these assets in dollar terms. These large changes in asset prices reflected a sudden decrease in production and earnings as global economic activity was disrupted by the COVID-19 pandemic.

U.S. liabilities decreased by $1.38 trillion, to a total of $38.82 trillion, at the end of the first quarter, mostly reflecting decreases in direct investment and portfolio investment liabilities that were partly offset by increases in financial derivatives and in other investment liabilities. Direct investment liabilities decreased by $1.78 trillion, to $8.77 trillion, and portfolio investment liabilities decreased by $1.61 trillion, to $19.78 trillion, mostly reflecting decreases in U.S. stock prices amid the COVID-19 pandemic.

Annual Update for Year 2019

The U.S. net international investment position was –$11.05 trillion at the end of 2019 compared to –$9.67 trillion at the end of 2018 (Table 2).

The –$1.38 trillion change in the net investment position from the end of 2018 to the end of 2019 came from net financial transactions of –$395.5 billion and net other changes in position, such as price and exchange rate changes, of –$980.5 billion (Table B).

U.S. assets increased by $3.92 trillion, to a total of $29.15 trillion, at the end of 2019, reflecting increases in all major categories of assets, particularly in portfolio investment and direct investment assets. Portfolio investment assets increased by $1.94 trillion, to $13.38 trillion, and direct investment assets increased by $1.35 trillion, to $8.80 trillion, driven mainly by foreign stock price increases.

U.S. liabilities increased by $5.30 trillion, to a total of $40.20 trillion, at the end of 2019, reflecting increases in all major categories of liabilities, particularly in portfolio investment and direct investment liabilities. Portfolio investment liabilities increased by $2.55 trillion, to $21.39 trillion, and direct investment liabilities increased by $2.15 trillion, to $10.55 trillion, driven mainly by U.S. stock price increases.

Table B. Annual Change in the U.S. Net International Investment Position
Billions of dollars

	Position, 2018	Change in position in 2019						Position, 2019
		Total	Attributable to:
			Financial transactions	Other changes in position
				Total	Price changes	Exchange rate changes	Changes in volume and valuation n.i.e
U.S. net international investment position	-9,674.4	-1,376.1	-395.5	-980.5	(1)	(1)	(1)	-11,050.5
Net position excl. derivatives	-9,716.5	-1,354.2	-357.2	-997.0	-1,104.9	119.5	-11.5	-11,070.7
Financial derivatives, net	42.0	-21.9	-38.3	16.4	(1)	(1)	(1)	20.2
U.S. assets	25,233.8	3,919.0	(2)	(2)	(2)	(2)	(2)	29,152.8
Assets excl. derivatives	23,784.2	3,578.2	440.8	3,137.4	3,080.1	128.3	-71.0	27,362.4
Financial derivatives	1,449.6	340.8	(2)	(2)	(2)	(2)	(2)	1,790.4
U.S. liabilities	34,908.2	5,295.1	(2)	(2)	(2)	(2)	(2)	40,203.3
Liabilities excl. derivatives	33,500.7	4,932.4	798.0	4,134.4	4,185.0	8.8	-59.4	38,433.0
Financial derivatives	1,407.5	362.7	(2)	(2)	(2)	(2)	(2)	1,770.3
1. Data are not separately available for price changes, exchange rate changes, and changes in volume and valuation n.i.e. (not included elsewhere). 2. Financial transactions and other changes in financial derivatives positions are available only on a net basis; they are not separately available for U.S. assets and U.S. liabilities.

Corporate Profits fall $263 billion in 1st Quarter 2020 - real GDP decreased 5.0 percent

Corporate Profits

Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) decreased $262.8 billion in the first quarter, in contrast to an increase of $53.0 billion in the fourth quarter (table 10).

Profits of domestic financial corporations decreased $37.5 billion in the first quarter, in contrast to an increase of $0.7 billion in the fourth quarter. Profits of domestic nonfinancial corporations decreased $181.8 billion, in contrast to an increase of $53.7 billion. Rest-of-the-world profits decreased $43.5 billion, compared with a decrease of $1.4 billion.

Updates to GDP

In the third estimate, first-quarter real GDP decreased 5.0 percent from the fourth quarter, unrevised from the second estimate. An upward revision to nonresidential fixed investment was offset by downward revisions to private inventory investment, PCE, and exports.  For more information, see the Technical Note. For information on updates to GDP, see the "Additional Information" section below.

	Advance Estimate	Second Estimate	Third Estimate
	(Percent change from preceding quarter)
Real GDP	-4.8	-5.0	-5.0
Current-dollar GDP	-3.5	-3.5	-3.4
Real GDI	…	-4.2	-4.4
Average of Real GDP and Real GDI	…	-4.6	-4.7
Gross domestic purchases price index	1.6	1.7	1.7
PCE price index	1.3	1.3	1.3
PCE price index excluding food and energy	1.8	1.6	1.7

Global foreign direct investment projected to plunge 40% in 2020

Global foreign direct investment (FDI) flows are forecast to decrease by up to 40% in 2020, from their 2019 value of $1.54 trillion, according to UNCTAD’s World Investment Report 2020.

This would bring FDI below $1 trillion for the first time since 2005. In addition, FDI is projected to decrease by a further 5% to 10% in 2021 and to initiate a recovery in 2022, the report says.

“The outlook is highly uncertain. Prospects depend on the duration of the health crisis and on the effectiveness of policies mitigating the pandemic’s economic effects,” said UNCTAD Secretary-General Mukhisa Kituyi.

The pandemic is a supply, demand and policy shock for FDI. The lockdown measures are slowing down existing investment projects. The prospect of a deep recession will lead multinational enterprises (MNEs) to reassess new projects. Policy measures taken by governments during the crisis include new investment restrictions.

Investment flows are expected to slowly recover starting 2022, led by global value chains (GVCs) restructuring for resilience, replenishment of capital stock and recovery of the global economy.

Early warning sign

MNE profit alerts are an early warning sign. The top 5,000 MNEs worldwide, which account for most of global FDI, have seen expected earnings for the year revised down by 40% on average, with some industries plunging into losses. Lower profits will hurt reinvested earnings, which on average account for more than 50% of FDI.

Early indicators confirm the immediacy of the impact. Both new greenfield investment project announcements and cross-border mergers and acquisitions (M&As) dropped by more than 50% in the first months of 2020 compared with last year.

In global project finance, an important source of investment in infrastructure projects, new deals fell by more than 40%.

“The impact, although severe everywhere, varies by region. Developing economies are expected to see the biggest fall in FDI because they rely more on investment in GVC-intensive and extractive industries, which have been severely hit, and because they are not able to put in place the same economic support measures as developed economies,” said James Zhan, UNCTAD’s director of investment and enterprise.

“Despite the drastic decline in global FDI flows during the crisis, the international production system will continue to play an important role in economic recovery and development. Global FDI flows will continue to add to the existing FDI stock, which stood at $37 trillion at the end of 2019,” Mr. Zhan added.

Global FDI flows rose modestly in 2019, following the sizable declines registered in 2017 and 2018. At $1.54 trillion, inflows were 3% up.

The rise in FDI was mainly the result of higher flows to developed economies, as the impact of the 2017 tax reforms in the United States waned.

Flows to transition economies also increased, while those to developing economies declined marginally. FDI flows to structurally weak, vulnerable and small economies remained stable overall, declining by only 1%.

Figure 1: Global FDI infows, 2015–2019 and 2020–2022 forecast

Source: UNCTAD

 

Figure 2: Impact of the pandemic on FDI: transmission mechanisms

Source: UNCTAD

 

Related links:

• Coronavirus (COVID-19) : News, analysis and resources
• World Investment Report 2020
• COVID-19 will likely transform global production, says UN report
• Investment flows in Africa set to drop 25% to 40% in 2020
• Investment flows to developing countries in Asia could fall up to 45% in 2020
• Foreign investment in Latin America expected to halve in 2020

U.S. International Transactions, First Quarter 2020 and Annual Update

The U.S. current account deficit, which reflects the combined balances on trade in goods and services and income flows between U.S. residents and residents of other countries, narrowed by $0.1 billion, or 0.1 percent, to $104.2 billion in the first quarter of 2020, according to statistics from the U.S. Bureau of Economic Analysis (BEA). The revised fourth quarter deficit was $104.3 billion.

The first quarter deficit was 1.9 percentage  of current dollar gross domestic product, up less than 0.1 percentage point from the fourth quarter.

The $0.1 billion narrowing of the current account deficit in the first quarter mainly reflected a reduced deficit on goods that was largely offset by a reduced surplus on primary income and an expanded deficit on secondary income.

Coronavirus (COVID-19) Impact on First Quarter 2020 International Transactions

The declines in first quarter 2020 current account transactions are, 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. In the financial account, currency swaps between the U.S. Federal Reserve System and several foreign central banks contributed to record levels of U.S. acquisition of assets and U.S. incurrence of liabilities. The full economic effects of the COVID-19 pandemic cannot be quantified in the statistics for the first quarter because the impacts are generally embedded in source data and cannot be separately identified. For more information on the impact of COVID-19 on the statistics, see the technical note that accompanies this release.

Current Account Transactions (tables 1-5)

Exports of goods and services to, and income received from, foreign residents decreased $47.5 billion, to $902.3 billion, in the first quarter. Imports of goods and services from, and income paid to, foreign residents decreased $47.7 billion, to $1.01 trillion.

Trade in Goods (table 2)

Exports of goods decreased $8.4 billion, to $403.0 billion, mostly reflecting decreases in capital goods, mainly civilian aircraft, and in consumer goods, mainly jewelry and collectibles. Imports of goods decreased $18.6 billion, to $595.3 billion, mostly reflecting decreases in consumer goods, mainly cell phones and other household goods, and in capital goods, mainly computers, telecommunications equipment, and other industrial machinery.

Trade in Services (table 3)

Exports of services decreased $11.7 billion, to $209.4 billion, and imports of services decreased $12.2 billion, to $136.1 billion. The decreases in both exports and imports mainly reflected decreases in travel, primarily other personal travel, and in transport, primarily air passenger transport.

Primary Income (table 4)

Receipts of primary income decreased $27.8 billion, to $255.1 billion, and payments of primary income decreased $18.3 billion, to $202.7 billion. The decreases in both receipts and payments mostly reflected decreases in direct investment income, mainly earnings.

Secondary Income (table 5)

Receipts of secondary income increased $0.3 billion, to $34.8 billion, and payments of secondary income increased $1.5 billion, to $72.4 billion. The increases in both receipts and payments mainly reflected increases in private transfers, primarily private sector fines and penalties.

Capital Account Transactions (table 1)

Capital transfer payments increased $0.9 billion, to $3.0 billion in the first quarter, primarily reflecting an increase in investment grants.

Financial Account Transactions (tables 1, 6, 7, and 8)

Net financial account transactions were −$201.1 billion in the first quarter, reflecting net U.S. borrowing from foreign residents.

Financial Assets (tables 1, 6, 7, and 8)

First quarter transactions increased U.S. residents’ foreign financial assets by $722.7 billion. Transactions increased portfolio investment assets by $144.7 billion, resulting from large and partly offsetting transactions in equity securities and debt securities, and other investment assets, mostly currency and deposits, by $614.6 billion. Transactions in deposits included $353.9 billion in foreign currency acquired by the Federal Reserve System from central bank liquidity swaps with foreign central banks. Transactions decreased direct investment assets, mostly debt instruments, by $36.3 billion, and reserve assets by $0.2 billion.

Liabilities (tables 1, 6, 7, and 8)

First quarter transactions increased U.S. liabilities to foreign residents by $902.0 billion. Transactions increased direct investment liabilities, mainly equity, by $47.8 billion; portfolio investment liabilities by $21.3 billion, resulting from large and mostly offsetting transactions in equity securities and debt securities; and other investment liabilities, mostly currency and deposits and loans, by $832.9 billion. Transactions in deposits included $387.3 billion in interbank deposits received by the U.S. branches of foreign banks from affiliated foreign banks. These were mainly the U.S. dollars that foreign central banks obtained through the swaps described in the assets section above, which they then lent to foreign banks.

Financial Derivatives (table 1)

Net transactions in financial derivatives were −$21.8 billion in the first quarter, reflecting net borrowing from foreign residents.

Updates to Fourth Quarter 2019 International Transactions Accounts Balances Billions of dollars, seasonally adjusted
	Preliminary estimate	Revised estimate
Current account balance	-109.8	−104.3
Goods balance	−202.8	−202.5
Services balance	62.9	72.7
Primary income balance	67.3	62.0
Secondary income balance	−37.3	−36.5
Net financial account transactions	−71.8	−29.3

Gross Domestic Product, 1st Quarter 2020 (Second Estimate); Corporate Profits, 1st Quarter 2020 (Preliminary Estimate)

Real gross domestic product (GDP) decreased at an annual rate of 5.0 percent in the first quarter of 2020 (table 1), according to the "second" estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 2.1 percent.

The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the decrease in real GDP was 4.8 percent. With the second estimate, a downward revision to private inventory investment was partly offset by upward revisions to personal consumption expenditures (PCE) and nonresidential fixed investment (see "Updates to GDP" on page 2).

Coronavirus (COVID-19) Impact on the First-Quarter 2020 GDP Estimate

The decline in first quarter GDP reflected the response to the spread of COVID-19, as governments issued "stay-at-home" orders in March. This led to rapid changes in demand, as businesses and schools switched to remote work or canceled operations, and consumers canceled, restricted, or redirected their spending. The full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate for the first quarter of 2020 because the impacts are generally embedded in source data and cannot be separately identified. For more information, see the Technical Note.

The decrease in real GDP in the first quarter reflected negative contributions from PCE, private inventory investment, nonresidential fixed investment, and exports that were partly offset by positive contributions from residential fixed investment, federal government spending, and state and local government spending. Imports, which are a subtraction in the calculation of GDP, decreased (table 2).

The decrease in PCE reflected a decrease in services, led by health care as well as food services and accommodations. The decrease in private inventory investment was mainly in nondurable goods manufacturing, led by petroleum and coal products. The decrease in nonresidential fixed investment primarily reflected a decrease in equipment, led by transportation equipment. The decrease in exports primarily reflected a decrease in services, led by travel.

Real gross domestic income (GDI) decreased 4.2 percent in the first quarter, in contrast to an increase of 3.1 percent (revised) in the fourth quarter. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, decreased 4.6 percent in the first quarter, in contrast to an increase of 2.6 percent in the fourth quarter (table 1).

Current‑dollar GDP decreased 3.5 percent, or $191.6 billion, in the first quarter to a level of $21.54 trillion. In the fourth quarter, GDP increased 3.5 percent, or $186.6 billion (tables 1 and 3).

The price index for gross domestic purchases increased 1.7 percent in the first quarter, compared with an increase of 1.4 percent in the fourth quarter (table 4). The PCE price index increased 1.3 percent, compared with an increase of 1.4 percent. Excluding food and energy prices, the PCE price index increased 1.6 percent, compared with an increase of 1.3 percent.

More information on the source data that underlie the estimates is available in the "Key Source Data and Assumptions" file on BEA's website.

Updates to GDP

In the second estimate, first-quarter real GDP decreased 5.0 percent from the fourth quarter, a downward revision of 0.2 percentage point. The revision primarily reflected a downward revision to private inventory investment that was partly offset by upward revisions to PCE and nonresidential fixed investment. For more information, see the Technical Note. For information on updates to GDP, see the "Additional Information" section below.

	Advance Estimate	Second Estimate
	(Percent change from preceding quarter)
Real GDP	-4.8	-5.0
Current-dollar GDP	-3.5	-3.5
Real GDI	…	-4.2
Average of Real GDP and Real GDI	…	-4.6
Gross domestic purchases price index	1.6	1.7
PCE price index	1.3	1.3
PCE price index excluding food and energy	1.8	1.6

For the fourth quarter of 2019, the percent change in real GDI was revised from 2.6 percent to 3.1 percent based on new fourth-quarter data from the BLS Quarterly Census of Employment and Wages.

Corporate Profits

Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) decreased $295.4 billion in the first quarter, in contrast to an increase of $53.0 billion in the fourth quarter (table 10).

Profits of domestic financial corporations decreased $67.4 billion in the first quarter, in contrast to an increase of $0.7 billion in the fourth quarter. Profits of domestic nonfinancial corporations decreased $169.5 billion, in contrast to an increase of $53.7 billion. Rest-of-the-world profits decreased $58.6 billion, compared with a decrease of $1.4 billion. In the first quarter, receipts decreased $72.7 billion, and payments decreased $14.2 billion.

Upcoming Annual Update of the National Income and Product Accounts

BEA will release results from the 2020 annual update of the National Income and Product Accounts on July 30, 2020, in conjunction with the advance estimate of GDP for the second quarter of 2020. For estimates of real GDP and its major components, the span of the update will cover the most recent five years (2015-2019) and the first quarter of 2020. Estimates of income and saving will be subject to revision from 1999 through the first quarter of 2020. More information on the 2020 annual update is included in the May Survey of Current Business article, "GDP and the Economy."

EXIM Approved 161 Small Business Authorizations Totaling Nearly $139 Million and Supporting 800 U.S. Jobs in March

EXIM Continues to Provide Critically Needed Support to U.S. Small Businesses Contending with the Historic Challenge of COVID-19

In March, the Export-Import Bank of the United States (EXIM) approved 161 authorizations totaling $138.8 million in support of American small businesses that export “Made in the USA” products around the world. These small-business related authorizations supported a preliminary estimate of 800 U.S. jobs in March 2020.

This total includes $134.6 million of short-term authorizations and $4.2 million of medium-term authorizations supporting small businesses.

“Now, more than ever, EXIM stands ready to support America’s small businesses and workers as they seek to export their outstanding ‘Made in the USA’ goods and services to the global marketplace during this very challenging time,” said EXIM President and Chairman Kimberly A. Reed. “To that end, EXIM is raising awareness about its programs – including export credit insurance, working capital guarantees, loan guarantees, and loans – and numerous COVID-19-related relief measures with diverse small-business exporters and potential exporters, as well as the brokers and financial institutions who assist them. We also encourage small-business exporters to reach out directly to EXIM if they need assistance.”

To see how small businesses from every state are using EXIM products, view success stories online.

EXIM Authorizations March 2020
EXIM Product	Total (in millions)	Short-Term (in millions)	Medium-Term (in millions)	Long-Term (in millions)
Export Credit Insurance	$ 163.3	$ 159.5	$ 3.8	–
Working Capital Guarantees	$ 19.7	$ 19.7	–	–
Guarantees and Loans	$ 130.5	–	$ 12.2	$ 118.3
Total	$ 313.5	$ 179.2	$ 16.0	$ 118.3
Small Business/MWOB
Small Business	$ 138.8	$ 134.6	$ 4.2	–
Minority and Women-Owned Business	$ 17.7	$ 17.7	$ 0.0	–
Top Industry
Manufacturing	$ 130.5	$ 125.6	$ 4.9	–

ABOUT EXIM:

EXIM is an independent federal agency that promotes and supports American jobs by providing competitive and necessary export credit to support sales of U.S. goods and services to international buyers. A robust EXIM can level the global playing field for U.S. exporters when they compete against foreign companies that receive support from their governments. EXIM also contributes to U.S. economic growth by helping to create and sustain hundreds of thousands of jobs in exporting businesses and their supply chains across the United States. In recent years, approximately 90 percent of the total number of the agency’s authorizations has directly supported small businesses. Since 1992, EXIM has generated more than $9 billion for the U.S. Treasury for repayment of U.S. debt.

BEA News: U.S. International Trade in Goods and Services, March 2020

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $44.4 billion in March, up $4.6 billion from $39.8 billion in February, revised.

U.S. International Trade in Goods and Services Deficit

Deficit:	$44.4 Billion	+11.6%°
Exports:	$187.7 Billion	-9.6%°
Imports:	$232.2 Billion	-6.2%°
Next release: June 4, 2020 (°) Statistical significance is not applicable or not measurable. Data adjusted for seasonality but not price changes Source: U.S. Census Bureau, U.S. Bureau of Economic Analysis; U.S. International Trade in Goods and Services, May 5, 2020

Coronavirus (COVID-19) Impact on March 2020 International Trade in Goods and Services

The declines in March exports and imports were, 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. The full economic effects of the COVID-19 pandemic cannot be quantified in the trade statistics for March because the impacts are generally embedded in source data and cannot be separately identified. The Census Bureau and the Bureau of Economic Analysis have monitored data quality and determined estimates in this release meet publication standards. For more information on the compilation of this month’s report, see www.census.gov/foreign-trade/statistics/notices/COVIDFAQSFT900.pdf for goods or www.bea.gov/help/faq/1412 for services.

Exports, Imports, and Balance (exhibit 1)

March exports were $187.7 billion, $20.0 billion less than February exports. March imports were $232.2 billion, $15.4 billion less than February imports.

The March increase in the goods and services deficit reflected an increase in the goods deficit of $4.6 billion to $65.6 billion and a decrease in the services surplus of $0.1 billion to $21.2 billion.

Year-to-date, the goods and services deficit decreased $28.1 billion, or 17.8 percent, from the same period in 2019. Exports decreased $21.7 billion or 3.5 percent. Imports decreased $49.7 billion or 6.4 percent.

Three-Month Moving Averages (exhibit 2)

The average goods and services deficit decreased $1.4 billion to $43.2 billion for the three months ending in March.

• Average exports decreased $7.2 billion to $201.3 billion in March.
• Average imports decreased $8.6 billion to $244.5 billion in March.

Year-over-year, the average goods and services deficit decreased $9.4 billion from the three months ending in March 2019.

• Average exports decreased $7.2 billion from March 2019.
• Average imports decreased $16.6 billion from March 2019.

Exports (exhibits 3, 6, and 7)

Exports of goods decreased $9.2 billion to $128.1 billion in March.

  Exports of goods on a Census basis decreased $8.8 billion.

• Industrial supplies and materials decreased $2.9 billion.
  • Crude oil decreased $1.0 billion.
  • Other petroleum products decreased $0.9 billion.
  • Fuel oil decreased $0.4 billion.
• Automotive vehicles, parts, and engines decreased $2.5 billion.
  • Automotive parts and accessories decreased $0.9 billion.
  • Passenger cars decreased $0.8 billion.
  • Trucks, buses, and special purpose vehicles decreased $0.4 billion.
• Capital goods decreased $2.0 billion.
  • Other industrial machinery decreased $0.4 billion.
  • Civilian aircraft parts decreased $0.4 billion.
  • Civilian aircraft decreased $0.2 billion.
  • Civilian aircraft engines decreased $0.2 billion.

  Net balance of payments adjustments decreased $0.4 billion.

Exports of services decreased $10.8 billion to $59.6 billion in March.

• Travel decreased $7.5 billion.
• Transport decreased $2.6 billion.

Imports (exhibits 4, 6, and 8)

Imports of goods decreased $4.7 billion to $193.7 billion in March.

  Imports of goods on a Census basis decreased $4.2 billion.

• Consumer goods decreased $4.0 billion.
  • Cell phones and other household goods decreased $2.5 billion.
  • Gem diamonds decreased $0.9 billion.
• Automotive vehicles, parts, and engines decreased $2.7 billion.
  • Automotive parts and accessories decreased $1.5 billion.
  • Passenger cars decreased $0.5 billion.
• Capital goods increased $1.5 billion.
  • Computers increased $0.8 billion.
  • Semiconductors increased $0.8 billion.

  Net balance of payments adjustments decreased $0.5 billion.

Imports of services decreased $10.7 billion to $38.5 billion in March.

• Travel decreased $7.7 billion.
• Transport decreased $2.9 billion.

Real Goods in 2012 Dollars – Census Basis (exhibit 11)

The real goods deficit increased $6.5 billion to $75.3 billion in March.

• Real exports of goods decreased $7.7 billion to $143.0 billion.
• Real imports of goods decreased $1.2 billion to $218.3 billion.

Revisions

Revisions to February exports

• Exports of goods were revised up $0.1 billion.
• Exports of services were revised up $0.1 billion.

Revisions to February imports

• Imports of goods were revised down less than $0.1 billion.
• Imports of services were revised up $0.1 billion.

Goods by Selected Countries and Areas: Monthly – Census Basis (exhibit 19)

The March figures show surpluses, in billions of dollars, with South and Central America ($5.0), Hong Kong ($1.9), OPEC ($1.5), Brazil ($1.4), Saudi Arabia ($0.3), and United Kingdom ($0.1). Deficits were recorded, in billions of dollars, with European Union ($16.9), China ($15.5), Mexico ($9.0), Germany ($6.0), Japan ($4.6), Italy ($2.8), Canada ($2.6), Taiwan ($2.0), South Korea ($1.9), India ($1.7), France ($0.7), and Singapore (less than $0.1).

• The deficit with the European Union increased $4.3 billion to $16.9 billion in March. Exports decreased $0.6 billion to $21.8 billion and imports increased $3.7 billion to $38.7 billion.
• The surplus with the United Kingdom decreased $1.2 billion to $0.1 billion in March. Exports decreased $1.3 billion to $4.9 billion and imports decreased less than $0.1 billion to $4.8 billion.
• The deficit with China decreased $4.2 billion to $15.5 billion in March. Exports increased $0.3 billion to $7.8 billion and imports decreased $3.9 billion to $23.3 billion.

Statement from U.S. Secretary of Commerce Wilbur Ross on Q1 2020 GDP Advance Estimate

The Department of Commerce’s Bureau of Economic Analysis (BEA) released the advance estimate for gross domestic product (GDP) for the first quarter of 2020, finding that real gross domestic product contracted at an annual rate of 4.8 percent.

U.S. Secretary of Commerce Wilbur Ross issued the following statement in response:

"Today’s GDP numbers are weak, but in line with expectations as a result of the COVID-19-driven disruptions to daily lives at home and around the globe that have rocked global markets and supply chains. We continue to have the most resilient economy in the world, driven by innovative and hardworking Americans who have shown that they are willing to make the needed sacrifices to defeat this invisible enemy.

The President has taken bold action to leverage the expertise and resources of the entire Nation in this fight. Congress has confronted the seriousness of this challenge with trillions of dollars in relief funding for those impacted by the virus, establishing a firm footing for a swift and strong American comeback. When this chapter ends, America will be both stronger and healthier than ever because of the President’s decisive and timely actions."