Australia’s trade deficit narrowed further in January and is expected to be in surplus by the end of 2010 as export prices for commodities continue to grow.
Australia’s trade deficit for January came in at $1.176 billion, seasonally adjusted, down almost $1 billion from December’s figure, making it the narrowest trade deficit since June 2009’s $376 million result.
The reason for the narrowing was a 1 percent increase in exports coupled with a 3 percent decrease in exports in January. This was lead by a dramatic drop in fuel and lubricant imports to the value of $666 million.
Commonwealth Bank economist James McIntyre was skeptical of the result.
“I wouldn’t read into the (overall) imports fall,” he said. “If you can explain how and why refined petrol falls in a month, or crude petroleum falls in the month, I mean maybe a tanker could have been delayed by a day.”
BHP is currently in negotiations to push up its iron ore prices to Chinese steelmakers 50%, if the trend is to continue across commodity prices for exports, it is expected the balance of trade will push into surplus by the end of 2010.
“When we see those prices come in mid-year, we are likely to see the deficit turnaround fairly sharply and we are likely to see small trade surpluses by the end of this year,” said ANZ economist Alex Joiner.
