The Congressional Budget Office (CBO) projects that strong domestic demand for goods and services in 2022 will continue to drive real imports to the United States, which are expected to increase 5.5% this year.
In CBO’s projections, imports remain strong because demand for goods remains elevated (compared to pre-pandemic), supply chain disruptions are diminishing, and recovering domestic inventories are driving import demand.
Like services exports, services imports continue to rebound as global demand for international travel increases.
CBO projects the growth rate of real imports to decline in 2023 and 2024 as growth in domestic demand for goods slows.
Conversely, CBO expects real exports to continue to rebound in 2022, increasing 7.4 percent.
One factor contributing to that rebound is improving economic conditions abroad, which will boost international demand for U.S. goods and services.
The CBO forecasts real economic output of major U.S. trading partners to rise 3.7 percent in 2022, after increasing 3.7 percent in 2021.
In addition, as the overall effects of the pandemic continue to diminish and international travel restrictions are lifted, services exports (especially travel and transportation services) are expected to gradually return to their pre-pandemic levels.
As this occurs, and as the pace of foreign economic growth returns to its pre-pandemic trend, CBO estimates export growth to increase slightly in early 2023 before slowing thereafter.
After rising 1.0% in 2021, CBO forecasts the international value of the dollar to rise 1.2% in 2022 before stabilizing in subsequent years.
The CBO estimates that the dollar will strengthen in 2022 because U.S. interest rates will rise more than those of most of its trading partners, which will tend to increase demand for dollars and dollar-denominated assets in international markets.
Beyond 2022, the CBO’s projection of a stable dollar reflects the agency’s expectation that changes in economic performance and monetary policies will cause the value of the dollar to appreciate against the currencies of advanced economies, but depreciate against emerging market currencies on a roughly offsetting basis.