Commodity prices and Chinese growth are still affecting Australia’s trade story, but the trade figures are improving, economists say.
Australia’s trade deficit narrowed by more than $1 billion in April, the Australian Bureau of Statistics (ABS) said on Friday.
The balance on goods and services was a deficit of $203 million in April, seasonally adjusted, compared with an downwardly revised deficit of $1.282 billion in March.
During April, exports were up 3.0 per cent in adjusted terms while imports were down 1.0 per cent, the ABS said on Friday.
Commsec economist Savanth Sebastian said Australia’s trade was still being impacted by commodity prices and regional growth.
“We’re seeing a slowdown in China, a shift in prices for coal and iron ore as key drivers of this data,” he said.
“But it was encouraging to see that coal and iron ore exports were up in the month.
Mr Sebastian said he expected the trade data to get steadily better as the year progressed.
“The Aussie dollar has come off. That’s a positive for exports, and we’ve seen them go up in this data,” he said.
“Better weather conditions, and stimulus to the Chinese economy should provide some optimism for the mid-term story.
JP Morgan economist Ben Jarman said the trade balance had been improving in 2012.
“Today’s data for April represents a back to back improvement in exports, while the first quarter deficit was exacerbated by a very large rise in fuel imports, which has now been unwound,” he said.
“There are plenty of unanswered questions regarding trading partner growth, and the sustainability of iron ore demand in China in particular, but for now the trade data are heading in the right direction.”
Mr Jarman doubts whether the trade figures would improve, but said they won’t get considerably worse.
“The import data are sending a reassuring message about domestic demand, but the outlook for exports remains murky. China’s slowdown has so far occurred without much transmission to global commodity prices, and if that continues, the impact on the huge domestic mining capex pipeline, and therefore the real economy, will be minimal,” he said.
