Trade surplus sets record
Strong mineral exports tipped to continue as China rebounds
SOLID growth in mineral exports in March after Chinese factories reopened following the coronavirus shutdown has driven Australia’s trade surplus to a record $10.6 billion, in seasonally adjusted terms.
The result was also helped by lower imports due to coronavirus-affected global supply chains.
The result bettered market expectations, with analysts having forecast a median surplus of $6 billion. The economy recorded a trade surplus of $3.86 billion in February.
Exports of goods and services in March rose 15 per cent to $42.4 billion, data from the Australian Bureau of Statistics showed yesterday.
The gains were led by iron ore exports, which jumped by nearly a third.
Exports of coal (up 6.0 per cent) and liquefied natural gas (up 10 per cent) also recorded solid gains, while gold exports more than trebled to $2.5 billion.
But exports of travel and transport services registered a sharp decline as coronavirus-related border restrictions shut down the majority of international travel.
Overall imports of goods and services were down 4.0 per cent to $31.8 billion.
This was mainly contributed by a waning demand for capital goods and industrial supplies as local business closures and a shutdown in China had an impact on supply chains.
Analysts expect Chinese demand for iron ore and coal to continue in coming months.
“We expect metals exports to be well supported in coming months by continued demand, particularly from China, given an expected ramp-up in infrastructure investment,” HSBC economists Paul Bloxham and Daniel Smith wrote in a note to clients.
They also expect both services exports and imports to continue falling sharply, given the closed borders and restrictions on people’s movements.
However, a decline in foreign visitors to Australia is expected to be offset by a sharp fall in Australians travelling abroad.
The trade numbers could also have some bearing on Australia’s March quarter GDP figures, according to JP Morgan economist Tom Kennedy.
“Today’s data indicate both real exports and imports declined 5.0 per cent in the March quarter, suggesting net trade will be neutral for GDP growth at the start of the year,” he said.
“This outcome is a little weaker than we had expected.”
The Australian dollar remained largely unaffected by the data.