The United States trade deficit for 1977 could total a record $20 billion, primarily as a result of oil imports. Treasury Secretary W. Michael Blumenthal said today.
That would be more than three times the size of the previous record U.S. trade deficit of $6.4 billion registered in 1972, and Blumenthal's announcement was seen as adding ammunition to President Carter's drive to win approval for his energy package.
One of the major rationales for the Carter administration's recent energy proposals is to reduce the impact of oil imports on this country's trade balance.
For the first quarter of 1977 alone, the excess of merchandise imported into this country over exports totaled $5.92 billion, just topping the $5.87 billion figure for all of last year.
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Analysts had attributed the huge hike in the first quarter red-ink total to a surge in petroleum-related imports primarily fuel oil brought in to replenish stocks drawn down by the unexpectedly severe winter.
But the Treasury Secretary's projection would indicate that the buildup in the deficit will continue at approximately the same pace for the last three quarters of 1977.
Blumenthal, speaking before the annual meeting of the Society of American Business and Economic Writers here, said that the country's balance on current account - a more significant measure because it includes so-called "invisibles" such as investment flows and services like insurance, as well as merchandise trade - would be less than the $20 billion total, but it is "too early to estimate" it precisely.
The Treasury Secretary said the growing trade imbalance should be watched carefully, but it will not be a major concern unless it continues into 1978.
However, if Blumenthal is right, the dollar could come under significant pressure later this year unless the trend is reversed.
In other remarks, Blumenthal predicted that real growth in this country's gross national product for the second quarter will approach 7 per cent. On top of the 5.2 per cent pace set in the first quarter of this year, this virtually would assure the administration's projection of 1977 real growth in the 6 per cent range.
And the Treasury Secretary said he recently had seen some preliminary surveys that show spending by business on new plant and equipment is picking up steam, but he gave no specifies.
Blumenthal, who accompanies President Carter to London on Thursday for the seven-nation summit, gave a veiled warning to the Japanese tonight that they must expand their level of imports or invite protectionist retaliation on trade.
"Visible steps to create a more hospitable climate for imports would reduce the risk of actions by other nations to limit imports from Japan," Blumenthal said in remarks prepared for a dinner of the Japan Society. "Such steps would reduce the risks of worldwide protectionism."
In the speech, which focused on the so-called North-South dialogue between the developed and developing nations.Blumenthal noted that Japan imports very little from the non-oil developing countries except raw materials and food, and that the amount of its imports of manufactured goods from these countries is "extremely small."
Japan, he said, "can make a greater contribution to helping expand the developing countries, sales of manufactured goods." Pointing out that 13 per cent of Japan's imports in 1976 were manufactured goods compared to 54 per cent for the United States.
Blumenthal said the sizeable current account surpluses the Japanese have run for eight of the last ten years have had two adverse effects on the developing countries: "They increase the size of the current account deficits which the developing countries must run as a share of the total non-OPEC (Organization of petroleum Exporting Countries) current account deficit.And they make it more difficult for the developing countries to generate world markets."