A report in The Sydney Morning Herald says monthly trade deficit has blown out to $2.7 billion – the second highest on record – on the back of a shrinking tourism sector, high demand for imports, and floods affecting coal production.
It is the 70th consecutive month in the red for the monthly trade deficit, despite the biggest boom in commodity prices for half a century.
But economists said the figures contained some welcome news, with a 1.7 per cent improvement in exports, including a jump in manufacturing exports.
“It could have been much worse,” an ANZ economist, Wain Yuen, said, adding, “Pleasingly, there was a broad-based improvement in exports, notwithstanding a drag from the coal sector, which had been hit by flooding in Queensland and northern NSW.”
Separate figures issued yesterday by the Australian Bureau of Statistics showed the tourism industry continues to struggle against the high value of the dollar, which reduces the value of overseas currencies in Australia.
Visitor numbers fell by 1 per cent in January, the latest confirmation of a broad decline since the beginning of 2007. Japanese tourists, in particular, are spurning Australia.
The number of Japanese tourists plumbed a new monthly low of 42,400 in January, down from a high of 65,700 in early 1998.
Financial market economists had largely expected a big trade deficit, given strong domestic demand, which has underpinned purchase of imports.
A JPMorgan economist, Helen Kevans, said higher interest rates would probably start to curb spending, helping to narrow the deficit later in the year.
But others stressed the long-term deterioration in the trade account.
“The trend series now shows the monthly deficit tripling in the past 15 months,” the chief economist at BT Financial Group, Chris Caton, said.
Rural exports picked up by $25 million, or 1 per cent, to $2.2 billion, while manufactured exports climbed 5 per cent. But non-rural goods exports fell by $6 million to $11.3 billion, with coal and coke sales down 5 per cent. The contribution of tourism to exports fell by $27 million, or 1 per cent, to $2.6 billion for the month.
A spike in consumption goods explained the increase in imports, after a $144 million, or 3 per cent, jump to $5.1 billion in the month.
Financial markets were little affected by the trade figures, as the dollar climbed to US93.45c, up US0.88c from the previous day.
A Report by The Mole from The Sydney Morning Herald
