Kalistani Major History

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Modest Trade Deficit appears on books in Kalistan
"Investment re-evaluation" of some FDI forces Kalistan to think about imports
Kaliburg, Grand Duchy of Ananto
January 5, 5549


While Volume Index has increased by about 20 percent in the last century, a trade deficit has been recently growing.

Kalistani economists released 100 year Index data that shows that the Kalistani economy has gone into trade deficit territory for the first time in about 80 years. "While the trade deficit appears small (less than 1 percent per year)," said Dr. Rona Johnson, lead researcher from Kaliburg Polytechnic, who led the study, "trade deficits are historically bad for Kalistan, and we expect to see a gradual reduction in imports going forward."

The problem, said Johnson was mostly in a re-evaluation of FDI being sent from Kalistan. "Much of the investment was earmarked for Gaduridos," said Johnson. "And it was delayed, and delayed and delayed, and the starts that were made were cancelled, and it turns out that most of the investments Kalistan had intended never made it through. So in re-evaluating this, we are as much as a fifth of a percent lower on volume over the past 15 years or so than we thought we would be. And we have actually been running a deficit for about 5 years now, reducing our overall trade volume by about 1%."

When House Ananto was contacted to ask about this situation, Casey Smith, spokeswoman for Grand Duke Mark Ananto-Orleans stated, "The re-evaluation of our overseas investments has affected us, but the investments which were ultimately cancelled in Gaduridos, through no fault of anyone in Kalistan, we will add, were hedged pretty heavily, and nearly all of the losses we suffered were offset in other places." Smith said the House believed that the revaluation has forced the Imperial House to shed more than ₭3.2 billion in assets and investments from the books, or about half of a percent of their total assets. "It is what it is," said Smith. "Sometimes that is what happens when you put your faith in a foreign population that can't even seem to put a functioning government together. When there are honest actors in Gaduridos, we may look into investment once more. But for now, House Ananto is pulling all its money out of Gaduridos."

The future of the Gaduri economy is unclear, but withdraw of Kalistani money will certainly end whatever prosperity that unfortunate country has experienced in the past two decades. Cancelled projects include the MoCo Factory, the KMD-backed microprocessor plant and the AcO steel mill that never really got off the ground, which represented tends of billion dollars of investments. All planned infrastructure improvements in Gaduridos have been similarly abandoned. Smith noted that it is also likely that the Grand Duke will likely sell his family's sprawling 400 acre estate and multi million Ruble mansion on the property. "It's absolutely out of House Ananto's hands," said Smith. "It almost feels like it was decided for us." The Grand Duke will not be homeless, Smith added. "The Sulari Property remains firmly in House Ananto's possession."

In Kalistan what a trade deficit will mean is that Kalistanis will look for ways to erase it. "There's two ways to get rid of a trade deficit," said Johnson. "We can either raise exports or cut imports. Or I suppose some combination of those two. Usually, Kalistan keeps a trade surplus internationally by limiting imports, and it is likely that this will be the strategy it turns to again. We have increased our foreign exports, including investment in foreign countries, and Kalistani consumers have shown that they like foreign products in Kalistani markets and will buy them. But it is likely that Kalistan will cut foreign imports by as much as 5 percent this year to try to being the trade flows back into balance."

This will affect everything from foreign luxury items to consumer goods like foreign automobiles. "Kalistan will likely cut less from foreign durable goods than from consumer goods," said Johnson. "Lourenne and Lodamun have benefits in that their goods are not treated as imports in Kalistan because of AESA, and are not counted in the trade balance. The deficit will more likely be made up on many of the deals Kalistan concluded or is looking into after the Kaliburg Trade Fair. We didn't get enough interest in our exports or investment out of the Trade Fair to balance the items we started accepting, and they will likely be the first to be cut." Investments that Kalistan made, such as investment in Mina's coffee industry or Luthori's infrastructure, are probably completely safe.

"Its expected that the slow down in Kalistani imports will have a marginal, but appreciable impact on world trade," said Johnson. "Kalistan has really opened its doors to trade and investment in the past twenty years, and the trajectory of international trade has generally experienced an upward swing. This won't stop that trend, but it will bend the curve slightly, and force Kalistan into a more conservative approach to trade and foreign investment going forward."