Australian trade deficit has narrowed to $1.32bn in March, according to data released by the Australian Bureau of Statistics (ABS) on Tuesday. The trade deficit narrowed a seasonally adjusted 18 per cent. In February, the deficit was reported to be $1.26bn, but was later revised to $1.61bn. The January deficit was $1.14bn. The results missed expectations by many analysts. The Bloomberg economist survey had projected the trade deficit to shrink to $1bn in March. Both imports and exports fell in March, down 2 per cent each. There was only a 1 per cent increase in services credit and a 2 per cent increase in services debt. March is the twelfth consecutive month that the trade balance has been in a deficit.
Australia’s key commodity exports iron ore and concentrates fell 1.3 per cent in March. Natural gas also fell in the month, dropping 11.7 per cent. Coal exports jumped 21.7 per cent. CBA senior economist John Peters cited falling commodity prices as the cause for the missed deficit projections. “While export volumes of coal and iron ore continue to increase, their price continued to fall over March and that was a key driver of the bigger deficit,” he said. “We've seen in 12 months falling commodity prices being a drag on the trade balance, not quite offset by the increase in volumes.” Other analysts reiterated this sentiment. JP Morgan economist Tom Kennedy attributed weaker iron ore and coal prices as the cause for missed projections. He also noted that data from the ABS was likely to be volatile due to market factors and trade disruptions such as Chinese New Year.
Author: Imran Valibhoy
May 05, 2015
Since Joining the firm in 2006, Imran has worked on a range of M&A and Capital Market transactions in the natural resources, mining as well as projects in the renewable energy sector. Prior to joining Wise-owl, Imran worked at Euroz Securities in Perth, aiding in the advisory and valuation of companies in the mining and industrial sectors in Australia. Imran has a Masters in Banking & Finance from City University's Class Business School in London and a Bacheloor degree in Commerce from UWA.