Australia’s trade deficit shrank for the second month in a row and is expected to move to surplus in 2014 as mining exports rise.
Australia’s trade deficit narrowed to $284 million in September, from $693 million in August, the Australian Bureau of Statistics said on Wednesday.
During the month, exports were mostly flat, while imports were down 1.0 per cent.
Despite exports barely rising in the month, shipments of metal ores and minerals had a solid rise.
Macquarie senior economist Brian Redican expects resource export volumes to steadily increase and continue to provide support for economic growth.
Mr Redican predicts the trade balance will shift into surplus over the next 12 months, as more mining and resources projects go on line and start producing and exporting.
“Basically, what’s going to drive exports higher is iron ore exports going on stream,” he said.
“I think we’re going to be in for a small surplus in 2014 but the big move is going to be in the following year.”
St George Bank senior economist Jo Horton said a goods and services trade surplus was getting closer and closer.
“Exports of metal ores and minerals have increased for three consecutive months and are up 57.5 per cent for the year to September,” she said.
“The greater export volumes should help underpin export values and offset lower levels of mining investment.
“We expect to see this trend in exports continue and it should help move the trade gap back into the black and boost economic growth.”
September’s smaller trade deficit was also helped by a three per cent drop in imports of capital equipment, and a three per cent fall in consumption goods imports.
But Ms Horton expects those imports to increase as consumer confidence increases.
“The trend remains encouraging and suggests the improvement seen in retail sales in September could continue in coming months,” she said.
“For the Reserve Bank, this trade data is unlikely to be a key consideration in its next interest rate decision.
“We continue to expect the RBA to leave official interest rates on hold for an extended period and expect the next move in interest rates from the RBA will be a hike.”
