Exports and Imports
Real exports of goods and services grew 9.2 percent during 2006, up from the 6.7 percent export growth over the four quarters of 2005. This acceleration reflects rapid growth among our trading partners. Real GDP among our OECD trading partners grew 2.9 percent during the four quarters of 2005, and is estimated to have grown at the same pace in 2006. In addition, the economies of some of our major non-OECD trading partners such as China, Singapore, and India are growing at rates of 7 to 10 percent per year, although these countries comprise only about 7 percent of our exports.
The fastest growth in U.S. goods and services exports was to India, but exports to China, Africa, and Latin America also grew rapidly. Despite the rapid export growth to these emerging economies, the European Union (EU) remains the major export destination, consuming nearly 25 percent of our exports. Within the EU, Great Britain's imports of American goods and services grew at a notable 18 percent annual rate during the first three quarters of 2006.
Real imports grew 3.1 percent in 2006, a slower pace than the 5.2 percent increase over the four quarters of 2005. Petroleum imports, which grew strongly in the fourth quarter of 2005 to replace production losses after the hurricanes, declined 10 percent during the four quarters of 2006. Real imports of nonpetroleum goods grew 5.3 percent over the same period, down slightly from the year-earlier pace.
The current account deficit (the excess of imports and income flows to foreigners over exports and foreign income of Americans) jumped to 7.0 percent of GDP in the fourth quarter of 2005, partly due to petroleum imports that replaced lost Gulf of Mexico production. The current account deficit then retraced some of its earlier increase in the first three quarters of 2006, when oil imports declined. It appears to have fallen further in the fourth quarter, reflecting the drop in prices of imported crude oil. Current account deficits mean that domestic investment continues to exceed domestic saving, with foreigners financing the gap between the two.