In Australia's improving trade performance - October 2008 statistics I commented on the remarkable turn-round in Australia's trade position, a move from deficit to surplus, at just the time Australia needed it.
The Australian Bureau of Statistics has just released new trade figures. How did Australia go?
The table below sets out seasonally adjusted exports and imports in $A million.
If you compare the numbers with the previous table you will see that they vary. This happens because of subsequent adjustments by ABS. I must say that the number of variations surprised me.
The pattern is similar to that outlined in my last report, with the balance of trade going into surplus at just the time we needed it to do so. That said, and as you might expect, the seasonally adjusted figures do show a weakening in Australia's trade position.
Imports continued to rise, while exports declined.
As an indicator of the effect of the global downturn, if we look at the original data, exports of non-agglomerated iron ore declined by 24% in volume terms, while prices were down 3%. Exports of metallurgical coal decreased 15% by volume, although here prices were up by 8%.
The following table shows Australia's trade performance in financial year terms, original data. Figures are in $ million.
You can see that we have had a fair size deficit. This compares with a surplus in the first five months of this financial year of $4,590 million. A substantial turn around.
The effect of the global downturn on our balance of trade position depends upon the net effect on imports and exports.
As you can see from the iron ore and coal examples, export volumes have already dropped sharply. This is reflected in mining lay-offs. We can also expect price falls.
On the other side of the ledger, we can also expect some fall in imports.
It all depends upon the scale of the two effects taking exchange rate movements into account.
Take the 07-08 figures and assume that the dollar value of exports drops by a third. The trade deficit would blow out by $78 billion. This would be unsustainable. The exchange rate would decline to the point that exports and imports were once again in something approaching balance.