The first trade deficit in almost a year could weaken economic growth, economists say.
The balance of goods and services showed a deficit of $673 million in January, seasonally adjusted, compared with a downwardly revised surplus of $1.325 billion in December, official data said.
Economists’ forecasts had centred on a surplus of $1.4 billion in January.
During January exports were down eight per cent in adjusted terms while imports were down one per cent, the Australian Bureau of Statistics (ABS) said on Friday.
Macquarie senior economist Brian Redican said the weak exports were indicative of how difficulties in the resources sector could have a wider effect.
“It does raise questions about our over-reliance on the mining sector and high commodity prices,” he said. “So, as we found this time last year, when you do have bad weather, it can have a big impact on these very heavily-concentrated operations.
Mr Redican said the trade data set the scene for a fairly weak gross domestic product (GDP) number for the first quarter to March 31.
He said there was some suggestion the volatility related to commodity prices but the generally weak figures for exports were still a concern.
“The decline in non-monetary gold is, obviously, a big part of it for the month, and that is volatile month on month.”
HSBC chief economist Paul Bloxham said the shift into deficit was quite a surprise.
He said the trade data was a further sign that Australia’s economic growth remained weak.
“It certainly fits the overall theme we’ve had from the data we’ve received over the last couple of days that the economy is growing at below trend,” Mr Bloxham said. “The Reserve Bank had been telling us in their latest statement that the economy was tracking at about trend, but we’re getting a number of indicators coming in, including this data, which suggest it is growing at below trend.”
JP Morgan economist Ben Jarman said he expected a softening in the trade figures, particularly in mining and resources.
“We got even more than we thought, so iron ore and some parts of coal volumes story lost a lot of ground,” he said.
“It’s hard to read too much into this because of the time of year.
“Australia recorded a deficit around the same time last year and, looking at the Asian data, it does get knocked around a fair bit by what happens with the production cycle, particularly in China around the Chinese New Year.
“It has very little to do with the cycle economically.
“It’s more about financial transactions being undertaken by large institutions offshore,” he said.
“We need to see a bit of comeback from these soft numbers if we’re to say that China is looking okay.”
Mr Jarman said the January trade figures wouldn’t affect the Reserve Bank of Australia’s next interest rate decision, in April.
