Australia Posts Widest Trade Gap Since ’08 on Record Imports
Australia’s trade deficit widened in November to the most since 2008 as transport equipment helped drive imports to a record, while overseas shipments of iron ore gained in the mining-driven economy.
Imports outpaced exports by A$2.64 billion ($2.77 billion), compared with a revised A$2.44 billion shortfall in October, the Bureau of Statistics said in a report in Sydney today. That was the widest since March 2008 and exceeded the median estimate in a Bloomberg survey for a A$2.3 billion gap.
The data underscore central bank Governor Glenn Stevens’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 1 percent to A$24.7 billion, led by a 6 percent gain in metal ores and minerals, today’s report showed. Imports advanced 2 percent to A$27.3 billion on a 6 percent increase in fuels and lubricants, the report showed.
Coal shipments abroad dropped 2 percent, the report showed, while transport equipment imports surged 57 percent.
“Key commodity prices for Australia remain significantly lower than earlier in the year, though trends have been more mixed over the past few months,” Stevens said in a statement after cutting the overnight cash rate target a quarter percentage point to 3 percent last month. “The terms of trade have declined by about 15 percent since the peak, to a level that is still historically high.”
Prices of the nation’s key export, iron ore, have rebounded since reaching a three-year low on Sept. 5 after China announced spending on new subways and roads.
The Australian dollar declined after the report, buying $1.0493 at 12:50 p.m. in Sydney compared with $1.0513 before the data were released. The yield on 10-year Australian government debt fell to 3.41 percent from 3.43 percent yesterday.
Australia’s economy has been driven by a resource bonanza for iron ore, coal and natural gas that is bringing record investment in projects. The nation’s unemployment rate, at 5.2 percent in November, is lower than 7.8 percent in the U.S.
To contact the editor responsible for this story: Stephanie Phang at email@example.com