SYDNEY, July 2, 2009 (AFP) - Australia posted its largest trade deficit in 12 months Thursday, as softening commodity prices and demand hammered export earnings amid the global economic turmoil, dealers said.
The trade deficit almost doubled to 556 million dollars (449 million US) in seasonally adjusted terms in May, up from 282 million in April, the Australian Bureau of Statistics (ABS) said.
|This file photo taken on December 22, 2008 shows a goods container ship being unloaded in Fremantle Harbour near Perth in Western Australia (AFP photo)|
Exports plunged five percent over the month, partially offset by a four percent fall in imports.
It was the steepest fall since July 2008, when Australia reported a seasonally-adjusted deficit of 717 million dollars, and was more than four times the median market expectation of 125 million.
Acting Trade Minister Kim Carr said a sharp fall in contract prices for iron ore and coal of between 35 and 60 percent was to blame for the deterioration in trade.
"While it is disappointing to see the value of exports falling, it is an inevitable consequence of the rapid slowdown in the economies of our major trading partners and the large falls in commodity prices that have occurred," Carr said.
"The pleasing thing about today's figures is that volumes for our resource exports are holding up well," he added.
But JP Morgan chief economist Steven Walters warned that China -- Australia's second-largest trading partner -- could be stockpiling commodities, one of its most important sources of income.
"It could be the Chinese think that they've got enough of our raw materials and are therefore not importing as much as they were before," Walters told ABC radio.
"If that's the case then that is quite a worrying sign," he added.
Exports of coal, coke and briquettes slumped 540 million dollars, or 15 percent, in May, while metal ores and minerals was two percent lower, the ABS said.
Booming Chinese demand for raw materials drove years of stellar growth for mining exports in Australia, underpinning an unprecedented period of prosperity for the country.
A stronger Australian dollar, which has been trading near or above 80 US cents for a number of weeks, was also hurting manufacturing exports, economists said.
Analyst Su-Lin Ong said export income, terms of trade and business investment would deteriorate further in coming months in Australia, which has so far avoided a technical recession.
"The full brunt of the deepest and most synchronised post-war global recession has yet to fully bear down upon Australia," said Ong, senior economist at RBC Capital Markets.
Canberra has launched stimulus measures worth more than 50 billion dollars (32.5 billion US) to combat the global economic crisis, while the central bank has slashed the cash rate by 425 basis points to 3.0 percent since September.