Australia’s Trade Deficit Narrows as Oil Imports Fall
Australia’s trade deficit narrowed in August as imports of oil and consumer goods fell.
The shortfall narrowed to A$1.52 billion ($1.33 billion) from a revised A$1.78 billion in July, the Bureau of Statistics said in Sydney today. The median estimate in a Bloomberg survey of 19 economists was for a A$900 million gap.
Central bank Governor Glenn Stevens will keep the benchmark interest rate unchanged at a 49-year low of 3 percent at 2:30 p.m. in Sydney today to boost domestic growth, according to 19 of 20 economists surveyed by Bloomberg. Export income will fall about 20 percent this year from a 2008 peak, the central bank forecast in August.
“The trade balance has moved sharply into deficit over the past few months as lower bulk commodity prices have seen export receipts tumble,” Kieran Davies, chief economist at Royal Bank of Scotland in Sydney, said ahead of today’s report.
Exports fell 2 percent to A$19.3 billion in August, today’s report showed. Farm shipments dropped 3 percent and coal slipped 8 percent.
Imports declined 3 percent to A$20.8 billion. Consumer goods imports dropped 6 percent and imports of oil plunged 24 percent.
BHP Billiton Ltd., the world’s largest mining company, reported in August a 65 percent decline in second-half profit after metal prices and demand plunged during the global recession.
Cash Handouts
To stoke domestic demand, the government has distributed more than A$20 billion in cash to households since the collapse of Lehman Brothers Holdings Inc. a year ago, and is spending another A$22 billion upgrading schools, railways, roads and ports.
Australia’s economic growth unexpectedly accelerated in the second quarter at the fastest pace in more than a year, expanding 0.6 percent from the previous quarter, when it gained 0.4 percent.
Faster growth is increasing pressure on Governor Stevens to raise the overnight cash rate target.
Investors have a 40 percent expectation Stevens will raise the overnight cash rate target by a quarter percentage point today, according to Bloomberg calculations based on interbank futures on the Sydney Futures Exchange at 10:36 a.m.
Filed under: business by Wolf