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US current account deficit narrows in fourth quarter

[WASHINGTON] The US current account deficit narrowed in the fourth quarter, but the improvement is unlikely to be sustained as a strong dollar continues to undercut exports of goods.

The Commerce Department said on Thursday the current account deficit, which measures the flow of goods, services and investments into and out of the country, fell 3.6 per cent to US$125.3 billion. The third-quarter deficit was revised up to US$129.9 billion from US$124.1 billion.

Economists polled by Reuters had forecast the current account deficit falling to US$118.9 billion in the fourth quarter. For 2015, it totaled US$484.1 billion, the largest since 2008.

The fourth-quarter current account deficit represented 2.8 per cent of gross domestic product, down from 2.9 per cent in the July-September quarter. The deficit represented 2.7 per cent of GDP for 2015, the largest since 2012 and up from 2.2 per cent in 2014.

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The current account deficit has declined from a record high of 6.3 per cent of GDP in the fourth quarter of 2005, as rising domestic oil production and lower international oil prices keep the import bill in check.

The dollar gained 20 per cent versus the currencies of the United States' main trading partners between June 2014 and December 2015, undermining exports. Goods exports fell 3.4 per cent to US$366.7 billion in the fourth quarter.