SYDNEY: Australia’s trade deficit marginally narrowed in November to 2.9 billion Australian dollars (2.04 billion U.S. dollars) from the 3.2 billion Australian dollar blowout in October, official figures released on Thursday show.
While Australian imports decreased by 1 percent for the month of November on seasonally adjusted terms, Australia’s exports rose 1 percent, the Australian Bureau of Statistics said.
Local economists had expected the country’s trade deficit to be just shy of 3 billion Australian dollars in November.
AMP Capital chief economist Shane Oliver told Xinhua that the narrowing of the deficit is a good result in the context that it’s smaller, however the deficit is still “hefty” and some of the drivers of the improvement aren’t sustainable.
“It’s a bit premature to get excited about it. There’s a long way to go before you could say it’s positive,” Oliver said.
Increasing rural goods exports, up 15 percent on October, came as the main driver of the lessening trade deficit while services exports, particularly tourism, also contributed thanks to the low Australian dollar.
“Rural exports are around 14 percent of total goods exports and could be a consistent income source for rural producers in the next few years if higher food and protein spending trends in Asia continue,” Commonwealth Bank of Australia senior economist Michael Workman said.
The low Australian dollar, which was trading at 70.35 U.S. cents Thursday noon and has been trading within the November range of 70-72 U.S. cents, has been limiting international travel by local residents while making the nation relatively cheaper for Asian and U.S. tourists.
“In annual terms, the tourism surplus looks set to keep rising,” Workman said.
However Australia’s negative trade balance, now in its 20th consecutive month, will likely continue for the foreseeable future.
Rising bulk commodity export volumes – Coal and Iron Ore, Australia’s largest export – coupled with new natural gas projects coming online will only partially offset low commodity prices “which will be a bit of a drag as we come into this year,” maintaining the negative trade balance at “these relatively high levels,” Oliver said.