Question

For the Week 8 Critical Thinking Exercise, you will review trade balances using the Economist publication (see graphic below) for major global economics for at least four countries and discuss the following data items below relative to trends observed and any reasons you believe this is occurring based on research of these economies and their characteristics relative to production and consumption trends. Trade Balance Current Account Balance Currency Units per US Dollar Interest Rates Budget Balance The submission should include a detailed written response reporting on trade policies and areas of comparative advantage in production.

Answer 1

ANSWER :

The four Countries are    :

• Australia

• France

• Germany

• Brazil

TRADE BALANCE   :

Australia:

It is the difference between what we export and what we import. It is ascertained by subtracting the value of the goods and services Australia buys from foreign from the value of the goods and services they sell to other countries. As per the latest report as of August 2018, Australia's trade balance was $1,604 million.

The below graph will make it very clear of how Australia's balance of trade is fluctuated

France   :

• The French trade balance has a deficit which has widened sharply to EUR 5.6 billion in August 2018 from a revised 3.4 billion in the previous month and way above market consensus of a EUR 4.5 billion gap.
• Imports jumped 4.9 percent to a near-record of EUR 47.0 billion while exports were almost unchanged at EUR 41.3 billion. Imports climbed 4.9 percent from a month earlier to a near all-time high of EUR 47.0 billion in August .
• Since 2004, France has been recording trade deficits due the gradual erosion of the export-oriented industry, the appreciation of the euro and the increasing dependency on imports of energy and manufactured products.

Germany   :

• The Germany trade surplus declined to EUR 17.2 billion in August 2018 from EUR 20.0 billion in the same month a year earlier, as exports rose by 2.2 percent to EUR 105.2 billion, while imports increased at a faster 6.2 percent to EUR 88.1 billion.
• On a seasonally adjusted basis, the trade surplus widened to EUR 18.3 billion in August from an upwardly revised EUR 15.9 billion in July and beating market expectations of EUR 16.4 billion. Exports dropped unexpectedly by 0.1 percent, missing forecasts of a 0.3 percent rise and after a downwardly revised 0.8 percent fall in a month earlier.
• Imports declined at a faster 2.7 percent, worse than market consensus of a 0.2 percent fall and compared to a 2.8 percent rise in July.
• Considering January to August 2018, the trade surplus narrowed to EUR 155.9 billion from EUR 160.1 billion in the same period the prior year. Balance of Trade in Germany averaged 5152.31 EUR Million from 1950 until 2018, reaching an all time high of 25455.63 EUR Million in March of 2016 and low of -535.91 EUR Million in April of 1991.
• On a adjusted basis, the trade surplus widened to EUR 18.3 billion in August from an upwardly revised EUR 15.9 billion in July and beating market expectations of EUR 16.4 billion.
• Exports dropped by 0.1 percent, missing forecasts of a 0.3 percent rise and after a downwardly revised 0.8 percent fall in a month earlier.
• Imports declined at a faster 2.7 percent, worse than market consensus of a 0.2 percent fall and compared to a 2.8 percent rise in July .
• From January to August 2018, the trade surplus narrowed to EUR 155.9 billion from EUR 160.1 billion in the same period the prior year.

  Brazil   :

• Brazil trade surplus narrowed to USD 4.97 billion in September of 2018 from USD 5.18 billion in the same month a year earlier and below market expectations of a USD 5.9 billion surplus.
• Imports increased 4.7 percent mostly due to fuels & lubricants, while exports went up at a slower 3 percent on the back of a surge in crude oil sales.
• Balance of Trade in Brazil averaged 851.70 USD Million from 1959 until 2018, reaching an all time high of 7661.35 USD Million in May of 2017 and a record low of -4066.52 USD Million in January of 2014.

  CURRENT ACCOUNT   BALANCE :

  Australia :

• Australia’s current account deficit widened to AUD 13.472 billion in the second quarter of 2018 from an upwardly revised AUD 11.678 billion gap in the previous quarter and higher than market expectations of a AUD 11.50 billion gap.
• The balance on goods and services surplus fell by AUD 532 million to AUD 2.812 billion. In addition, the secondary income deficit went up by AUD 161 million to AUD 351 million and the primary income deficit rose by AUD 1.102 billion to AUD 15.934 billion.
• Current Account in Australia averaged -5306.25 AUD Million from 1959 until 2018, reaching an all time high of 13500 AUD Million in the second quarter of 2018 and a low of -22594 AUD Million in the fourth quarter of 2015.

  France :

• France's Current Account recorded a surplus of 633.3 USD million in Jul 2018, compared with a deficit of 3.0 USD billion in the previous month.
• France's Current Account Balance It reached an all-time high of 4.9 USD bn in Jul 1999 and a record low of -8.4 USD bn in Jun 2014. CEIC converts monthly Current Account Balance into USD.
• The Bank of France provides Current Account Balance in EUR based on BPM6. Federal Reserve Board average market exchange rate is used for currency conversions. Current Account Balance prior to January 2008 is based on BPM5. Foreign Direct Investment (FDI) increased by 3.6 USD bn in May 2018.
• France's Direct Investment Abroad expanded by 467.0 USD mn in May 2018.
• Its Foreign Portfolio Investment increased by 33.5 USD bn in Mar 2018. The country's Nominal GDP was reported at 696.2 USD bn in Jun 2018.

• Germany :

• Current account balance in Germany was 8.35 as of 2016. Its highest value over the past 45 years was 8.54 in 2015, while its lowest value was -1.73 in 2000. Germany’s current account surplus is unusually, and persistently, large.
• It was above euro 250 billion euros in 2017, the third consecutive year with a current account surplus above 7.8%

  Brazil :

• Brazil's Current Account recorded a surplus of 435.0 USD mn in Jun 2018, compared with a surplus of 730.0 USD mn in the previous month.
• Brazil's Current Account Balance: USD mn data is updated monthly, available from Jan 1995 to Jun 2018, with an averaged value of -2.0 USD bn.
• The data reached an all-time high of 3.0 USD bn in Jul 2006 and a record low of -13.2 USD bn in Jan 2014. The Central Bank of Brazil provides monthly Current Account Balance in USD.
• Foreign Direct Investment (FDI) increased by 6.5 USD bn in Jun 2018. Brazil's Direct Investment Abroad fell by 4.9 USD bn in Jun 2018. Its Foreign Portfolio Investment fell by 3.6 USD bn in Jun 2018.
• The country's Nominal GDP was reported at 470.7 USD bn in Jun 2018.

  INTEREST RATES :

  Australia :

  Central bank holds interest rates steady at 1.5 percent. The Reserve Bank of Australia with rates held at a record low of 1.50 percent.

  France :

  It’s   interest rate In the Euro Area was last recorded at 0 percent. Interest Rate is averaged at1.99 percent from 1998 until 2018, reaching an all time high of 4.75 percent in October of 2000 and a record low of 0 percent in March of 2016.

• The France Interest Rate Chart :

• 

• GERMANY :

• Interest rates in Germany is clearly shown in below chart

• 

  Brazil :

• .Brazil has lowered its interest rates by 0.25 percentage points, from 6.75% to an annual rate of 6.5%.
• The key rates a tool used by Central Banks to implement monetary policy.

• This change is the first to have taken place since on February 7th 2018, when the Central Bank lowered interest rates by 0.25 percentage points to 6.75%.

• A reduction in interest rates counters a weakening of prices, or a possible deflationary situation. It also revitalizes the economy and helps to increase exports.