Published on January 17th, 2013 | by Louise Ramsay
Australia’s trade deficit widest since 2008
Australia’s trade deficit saw its widest increase in November since 2008. Increased imports of transport equipment helped drive the increase, though this was offset to some extend by shipments of iron ore overseas.
The Australian Bureau of Statistics said that imports outpaced exports by A$2.64bn ($2.77bn), which compares to a revised A$2.44bn shortfall in October.
The data underscore central bank Governor Glenn Steven’s decision to reduce interest rates four times last year as commodity prices retreated. Policy makers are trying to revive demand outside of a resources boom that may crest in the first half of 2013, while a higher currency is fueling imports.
“People are happy to use the high Aussie dollar to spend where it’s affordable,” said Ben Jarman, a Sydney-based economist at JPMorgan Chase & Co. who noted a jump in imported cars. “Exports seem to be stabilizing.”
Exports rose one per cent to A$24.7 billion, led by a six per cent gain in metal ores and minerals, the report showed. Imports advanced two per cent to A$27.3 billion on a six per cent increase in fuels and lubricants.
Coal shipments abroad dropped two per cent, the report showed, while transport equipment imports surged 57 per cent.
Stevens also said that key commodity prices for Australia were much lower than earlier in the year, though this did not reflect the mix of trends over the previous few months.
Prices of the nation’s key export, iron ore, soared after dropping to a three-year low on September 5 following an announcement by China about investment in its road and subway infrastructure.
National Australia Bank’s chief market economist, Rob Henderson, told ABC News:
“We did see some improvement in exports by volume, of coking coal and semi-soft coal, but on the other hand the overall trade deficit has deteriorated, which means we’re importing more than we’re exporting, and that tends to reduce the prospects for GDP [economic growth] in the fourth quarter of the year.”
Engine behind the economy
Australia’s natural resources including iron ore, coal and natural gas are driving its economy and continue to help it win investment in projects. Its unemployment rate, at 5.2 per cent in November, is lower than the 7.8 per cent in the US.