In March, trade deficit of Australia narrowed to AUD 2.2 billion, narrower than market projections and on par with ANZ’s expectations. Deficit for February was downwardly revised to AUD 3 billion from AUD 3.4 billion. This was mostly because of services exports being revised upward and goods imports being revised downwards, noted ANZ.
The value of resource exports rose 9.5% m/m in March and was the main driver for narrowing the trade deficit in March. Non-monetary gold grew nearly 60% m/m. Meanwhile, metal ores and minerals also grew robustly, rising 7.6% m/m, likely because of higher volumes and higher prices, said ANZ. Growth was also seen in other mineral fuels, including LNG. Since the prices were weak, it appears to have been mainly driven by higher volumes. Volumes of LNG export are growing due to increase in mega projects coming online.
Meanwhile, imports grew 0.7% m/m pulled down by consumption goods that fell 2.2% m/m. Total goods import, stripping volatile items, fell 1.5% m/m. Non-monetary gold rose 32.8% m/m, while fuels grew 20% m/m. In 2016, Australia’s trade deficit is likely to further narrow slightly in H2 2016 as volumes of LNG export increase and slightly better commodity prices feed through, according to ANZ.
