Australia’s international trade deficit has narrowed for the fourth consecutive month and strengthening resources exports are expected to support a shift back to surplus.
The deficit on goods and services was $118 million in November, down from October’s deficit of $358 million, the Australian Bureau of Statistics said on Tuesday.
It also was better than the $300 million deficit economists had expected.
During the month, exports were flat, while imports were down one per cent.
The decline in the value of imports helped narrow the deficit, ANZ economist Dylan Eades said.
The figures also showed a small increase in rural goods and resources exports, he said.
“What we have seen in the last six to nine months is that exports, particularly iron ore, are beginning to pick up,” Mr Eades said.
“All of that investment that we’ve seen from Rio Tinto and BHP Billiton and Fortescue, we are beginning to see those projects come to completion and we are seeing them move into the production phase. So, as a result, we are starting to see quite a strong volumes increase.
“Metal ores exports are around 40 per cent higher over the past year and we expect that to continue. We’re expecting iron ore export volumes to rise from around 570 million tonnes in 2013 to about 620 million tonnes in 2014 and 680 million tonnes in 2015.
“We would be expecting a continued improvement in the trade balance over the next few months.”
The data highlighted Australia’s dependence on China, CommSec chief economist Craig James said.
“Australia’s annual exports to China totalled over $92 billion, so it will be truly staggering just how much income will be generated from our largest trading partner when all the major resource projects are operating at full capacity,” Mr James said.
“Annual exports to China equate to $4,000 for every Aussie man, woman and child.
“Despite the mountain of export revenue being generated from China, Australia’s trade accounts are still in the red, rather than the black… That situation should be corrected when all the key LNG facilities are up and running over the next few years.”