Fall in trade surplus ‘temporary’

AUSTRALIA’S trade surplus has narrowed to $856 million in June, from a $2.02 billion surplus a month earlier on the back of price drops for iron ore and coal.

The value of exports fell 1 per cent in June, while the price of imports increased 2 per cent, the Australian Bureau of Statistics said yesterday.

Economists said the tighter surplus appears set to be temporary, with iron ore rebounding to above $US70 a tonne, and liquefied natural gas exports forecast to grow swiftly.

“Iron ore prices have rebounded $US10-15 a tonne since the low in June, which should show up in next month’s export figures,” National Australia Bank chief markets economist Ivan Colhoun said.

“LNG exports continue to grow and are set to grow more strongly in coming months as major West Australian projects come on line. This should see the trade balance return to sustainable sizeable surpluses.”

Mr Colhoun said other encouraging trends included a tourism surplus of about $700 million, while net exports now appeared likely to make a flat or small contribution to June quarter economic growth following the cyclone-affected 0.7 per cent detraction to GDP in the March quarter.