UPDATE 1-U.S. current account deficit hits 14-year low
* Current account deficit narrows to $81.1 billion
* Deficit falls to 1.9 percent of gross domestic product (Adds details, analyst comments, background)
WASHINGTON, March 19 (Reuters) - The U.S. current account deficit tumbled to a 14-year low in the fourth quarter as investment income rose and a boom in domestic energy production curbed imports, which should support the dollar in the long-term.
The Commerce Department said the current account gap, which measures the flow of goods, services and investments into and out of the country, narrowed to $81.1 billion from $96.4 billion in the third quarter. That was the smallest deficit since the third quarter of 1999.
"Any deficit narrowing is good news. It should help to support the U.S. dollar, more on a long-term basis," said Jennifer Lee, a senior economist at BMO Capital Markets in Toronto.
The current account gap represented 1.9 percent of gross domestic product, the smallest share since the third quarter of 1997. It was down from 2.3 percent in the July-September period.
For all of 2013, it averaged 2.3 percent of GDP, the smallest since 1997.
In the fourth quarter, the U.S. surplus in investment income rose to $64.4 billion from $59.1 billion in the third quarter. Net unilateral transfers to foreigners, such as humanitarian aid and remittances, fell to $31.6 billion from $34.0 billion.
A decline in petroleum imports as the nation reduces its dependency on foreign oil also helped shrink the deficit.
"With a further sharp increase in domestic oil production projected in 2014, and domestic energy consumption flat, we would expect to see a further corresponding drop off in oil imports this year," said Paul Ashworth, chief U.S. economist at Capital Economics in Toronto.
Economists also expect businesses to scale back imports as they try to whittle down their inventory.
Businesses accumulated a massive amount of stock in the second half of 2013 and have little incentive to acquire more goods given sluggish domestic demand.
The shortfall on the current account has shrunk from a peak of 6.2 percent of GDP in the fourth quarter of 2005, in part because of a significant increase in the volume of oil exports.
In the fourth quarter, exports of goods and services rose 2.5 percent to a record $785.2 billion, while imports rose only 0.7 percent. (Reporting by Lucia Mutikani; Editing by Andrea Ricci)
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