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Australia - Trade Balance Deficit

Discussion in 'The Economy' started by bigbuddha, 4th Jun, 2009.

  1. bigbuddha

    bigbuddha Well-Known Member

    17th Jan, 2007
    Brisbane, QLD
    Hmm.. Australia has recorded a Trade Balance deficit of -91 million.

    This is suprisiing since it was estimated that we would have a Trade Balance SURPLUS of 1700 Million.

    That's a pretty whopping turning around from initial estimates.

    Please discuss and dissect.
  2. Chris C

    Chris C Well-Known Member

    2nd Apr, 2008
    Brisbane, QLD
    I think most economists were expecting that eventually we would fall back into deficit, just not this quick.

    Obviously the significantly stronger AUD through April wouldn't have helped any, and obviously it isn't looking like things will get better in May or the near future given our dollar has strengthened even more and that our primary export products coal/iron ore prices have/are falling significantly.

    It would also appear that whilst demand for these is/was higher than expected earlier in the year but there wasn't a lot of fundamental justification for the high demand and it seems many analysts are ultimately expecting the demand to fall off once adequate stock piling by countries such has China has been reached.

    All in all, I think this was always going to be the likely progression, and obviously this will bring with it more negative news for the Australian economy going forward, and makes the likelihood that Q2 GDP results may end up going negative again, which I think most analysts are expecting at this stage.

    On the plus side despite the stronger AUD Australians are still importing less which I think is a positive step because ultimately as a country we will at some point need to rectify our long history of trade deficits, and reliance on imports based on the belief world will continue to buy our dirt well into the future rather us looking to have a higher reliance on domestic production. Personally I think for a long time Australia has very much been using a "putting all your eggs in one basket" style strategy, but I think this as a longer term strategy is really starting to look flawed and highly risky.