Australia’s trade deficit has extended into its third straight month, but economists say a return to surplus is likely as coal exports recover from the impact of bad weather over the summer months.
The trade deficit widened to $1.587 billion in March, seasonally adjusted, as a five per cent rise in imports outstripped a two per cent rise in exports, the Australian Bureau of Statistics said on Tuesday.
It is the largest deficit since October 2009.
Commonwealth Bank senior economist John Peters said flooding across eastern states during the summer months and industrial action at central Queensland mines had affected the supply of coal during the month.
“We’re seeing some negative impact from that which is holding back exports,” he said.
He said the high value of the Australian dollar and the importing of capital goods from overseas to service the boom in mining investment had lifted imports.
Australia trade balance slipped into deficit in January after 11-straight months of surplus.
However, Mr Peters said the trade balance was likely to move back into a surplus once supply issues with the coal sector were sorted out.
“The demand is still there and we expect to move back into trade surpluses later in the year.”
HSBC chief economist Paul Bloxham said the consistent deficit trend in recent months was concerning, adding that falling commodity prices could prevent trade from reaching a surplus in the near future.
“The overall balance is not too far off the expectation, but it is disappointing that we’ve been in deficit for the whole of the last quarter,” he said.
“I think the main story here is that we’re likely to see a subtraction from exports in the first quarter, which is a downside risk to first quarter growth in the economy,” he said.
Mr Bloxham said that traditionally weaker sectors – such as retail and housing – appeared to be strengthening, as trade data softened.
“To some degree we’re also seeing rebalancing in the economy – the traded side had been contributing more, and yesterday we saw that the housing numbers have levelled out a bit, and retail numbers have picked up,”
The Reserve Bank of Australia would be likely to view softer trade figures as a vindication of its decision to cut the cash rate by 50 basis points at its May 1 meeting, Mr Bloxham said.
