Wednesday, February 09, 2011
A very extended J-curve
Posted by David Smith at 12:15 PM
Category: Thoughts and responses

Those of us hoping for the promised export-led recovery are having to be very patient. Yes, exports are growing well but so are imports and, indeed, import prices. So far we are seeing the downside of a weak pound in rising inflation but not much of an upside.

Economic theory would point to the J-curve effect - initially the trade numbers worsen, then they improve. That should happen, but it is taking time. In the meantime we have to live with December's record 4.8 billion goods and services deficit, up from 3.9 billion in November. More details here.