Five highlights of Australia’s recent trade deficit

Leave a comment
Australian Economy, Uncategorized

As per the recent data released by the Australian Bureau of Statistics on trade deficit, the following aspects have come under spotlight:

Largest trade deficit witnessed with missing the market estimates: In May 2016, Australia reported for a trade widening of AUD2.22 billion reflecting an increase of 24% from an upwardly revised AUD1.79 billion deficit in April 2016. Primarily, the decline of $433 million over the revised April total was driven by an increase in imports of goods and services.

Steady levels in exports while non-mining service sector continues on recovery mode: The trade deficit in May has been the largest deficit since February given that exports jumped about 0.7% to AUD26.17 billion. The marginal rise was driven by increase in commodity exports. Total exports in May were of the order of AUD 26,170 million. However, there was a 2.3% rise in resource exports on a month-on-month basis post the decline in April. Metal ores and minerals’ exports surged 3.6% with metals exports, excluding non-monetary gold, growing 6.1%. There was a 2.2% fall in rural goods’ exports post the 4.1% rise in April. On the other hand, export of services witnessed growth of 0.5%, up for the fourth straight month, in a way depicting a stable rise in service exports with an indication that sectors other than mining continuing to recover.

td

Balance on Goods and Services (Source: Australian Bureau of Statistics)

Rise in Imports: Imports rose 2.2% to AUD28.39 billion in May. Primarily, imports of capital and intermediate goods surged 3.8% and 4.6%, respectively on sequential basis. Imports of intermediate and other merchandise goods rose AUD 385 million and capital goods rose AUD 182 million. Imports of non-monetary gold increased AUD 124 million against consumption goods that fell AUD 81 million. This implicitly reflects rise in domestic demand. However, it is too early to predict the course of recovery. There are also opinions that growth in export may outweigh growth in imports in the near term.

td11

Export and Import Trend (Source: Australian Government, Department of Foreign Affairs and Trade)

Commodity prices: In the month of May, the commodity prices did suffer a slight blow while weak local currency drove export volumes for the resource-dependent economy. Rising export volumes and prices for iron ore and coal majorly drove the increase in export income. The rise in iron ore prices coupled with Chinese demand led to a recovery in goods export values post the near five-and-a-half-year low in December last year for the exports income.

Rise in foreign debt and effect from Australian dollar: As seen in the earlier months of the year, foreign debt kept growing above $1 trillion. The lower AUD supported non-mining and resources exports. However, the weak currency led to a competitive advantage that was offset by uneven international markets.

kunalsa1 (1)


Disclaimer
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated websites are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376).The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd currently hold positions in:  BHP, BKY, KCN, PDN, and RIO. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.

 

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s