ETM Analytics MD and Chief Economist George Glynos explained in a letter to the editor of Business Day why Leon Louw’s claims that focusing on aggregate economic numbers like trade deficits is ‘worrying over nothing‘ is misleading.

The reality is we live in a world of centrally planned dislocations of economic activity. Sustained trade imbalances can only happen if a central bank overstimulates consumption over production. That is what looking at the trade deficit tells us. The ‘worry’ in this context is that currently these imbalances are building up in the retail and government sectors. When that bubble bursts, it will have devastating financial implications for individuals and businesses who acted to serve that false demand.

It is the job of the non-bank private economist to explain this to his or her clients.