Australia posts surprising trade deficit
Australia’s terms of trade have dramatically reversed, with the commodity-driven economy posting its first trade deficit in nearly a year, for the month of February.
Data from the Australian Bureau of Statistics revealed the deficit totalled $205 million, which came as a surprise to economists who had forecast a surplus of $1.1 billion for February.
“We’ve been recording very large trade surpluses for some time and we did think that surpluses would narrow in coming months, but we weren’t predicting the deficit,” admitted Besa Deda, St George Bank’s chief economist. The last time Australia recorded a trade deficit was in March 2010.
Deda put the fall down to recent natural disasters. “In January, coking coal and thermal coal exports were down… and I imagine volatility on that front (is) probably affecting the trade result.” Exports declined two percent in February following flooding in Queensland and fires in Western Australia.
Meanwhile, imports rose by five percent to $2.682 billion. This is primarily due to a 26 percent jump in fuel prices over the period. JP Morgan economist Helen Kevans said the trade data showed the obvious impact of the Queensland disasters, but the deficit should be short lived.
“In terms of the outlook thereafter the sheer size of this investment boom and the fact that it is led by investment in resource companies, exports of our key commodities including iron ore and coal should increase substantially throughout the year,” she said.
While the deficit came as a surprise, overall trade data for the year is positive. Exports rose 15.5 percent over the year to February while imports rose 8.1 percent.