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Economy in Brief

Australian Trade Deficit Wider in March
by Carol Stone May 5, 2005

The Australian trade deficit widened distinctly in March. The A$2.7 billion gap, reported today by the Australian Bureau of Statistics, is the second largest monthly shortfall ever. In this latest month, both exports and imports moved adversely, with exports down 1.5% and imports up 3.3% from February.

At the same time, longer comparisons suggest that March's trade deficit widening, and the dip in exports in particular, is perhaps not representative of current trends. Exports, in fact, have expanded 12.4% over the past year, encompassing a 17.6% advance in "non-rural goods" shipments. These products appear quite vigorous, recovering markedly from a decline during 2003. Agricultural items, in contrast, have undergone extraordinarily wide cycles in the last several years, and have become less reliable as a prop to the Australian economy.

Imports, as in many countries, are being impacted by the rising cost of energy products, reflected here in the "intermediate goods" line item. Consumers continue to buy foreign products, while demand for capital goods from abroad is beginning to show signs of hesitation. This latter is notable, for, as seen in the second graph, imports of capital goods closely parallel the national accounts measure of investment in machinery and equipment. So the downturn in these imports in the opening months of 2005 may suggest slower investment demand in general in Australia.

Australia Mar 2005 Feb 2005 Year Ago 2004 2003 2002
Balance on Goods & Services -2,672 -2,238 -2,098 -25,434 -23,749 -10,325
Exports of Goods 10,151 10,302 8,870 118,427 108,321 119,478
  Rural Goods 1,904 2,075 2,003 26,925 22,357 28,866
  Non-rural Goods 8,247 8,227 6,867 91,502 85,967 90,612
Imports of Goods 12,910 12,501 10,921 142,739 131,656 129,468
  Consumer Goods 4,070 4,054 3,579 45,304 41,397 39,931
  Capital Goods 2,838 2,949 2,599 34,417 31,032 303,79
Intermediate & Other Goods 6,002 5,499 4,743 63,018 59,227 59,158
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