Australia's imports declined 1.5% in December. Imports of intermediate goods fell 4.3%, capital goods by 3.2%, consumption goods 0.7%, whereas services imports were up 1.5% and gold was up 0.1bn. The AUD appreciated 1.5% on a TWO basis, putting downward pressure on the AUD value of exports and imports. Exports declined 4.7% or $1.2bn in December, 6.8% lower than in late 2014.
Exports of iron ore declined 23% in December. Its spot price dropped 14% to US$40/t, while the volumes eased. Meanwhile, exports of coal declined $0.2bn in December 2015. Exports of rural goods reversed, declining $0.4bn. For the month of December, Australia's trade deficit broadened to $3.5bn, deteriorating $0.8bn from November. This was weaker than expectations.
In Q4, Australia recorded a trade deficit of $9.5bn, down $2.0bn from Q3. The deterioration in Q4 indicated a further drop in the terms of trade by around 3.5% Commodity prices continued to decline on increasing supply amidst weakening demand. In Q4, real net exports were probably a little positive, adding 0.3ppts to the GDP growth.
