- Craig James, chief economist at CommSec
Australia's trade deficit came in better than expected, as stronger export volumes helped temper falling commodity prices. The trade gap widened to a seasonally adjusted $925 million in November, which was markedly smaller than the $2 billion deficit predicted by economists. Imports rose 0.7%, reflecting soft domestic demand, while exports climbed 0.6% in the reported month. The biggest export boost came from "other mineral fuels", the category dominated by liquefied natural gas, which rose 21%, or $529 million. The October's trade deficit was revised downwards to show the $877 million gap.
Although, the trade data surprised to the upside, the gap between exports and imports had widened since October, indicating the ongoing deterioration in the nation's terms of trade. However, a return to trade surplus is realistic in the medium term as weaker Australian Dollar would boost non-mining exports and make all exports more competitive. China will continue to play a significant role, as resource exports to the country will be dominant in the Australia's trade story ahead. On top of that, services exports will also be important as the world's second biggest economy is switching from investment towards consumption, thus providing further opportunities for Australian tourism and education sectors.
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