The Australian Trade Balance Drastically Decreased in January

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Australia’s trade surplus dramatically diminished in January, as official figures revealed. 

Although exports had a slight uptick, this was overshadowed by a highly elevated number of imported automobile shipments – leading to a decline in the country’s overall surplus.

Last month, Australia boasted a surplus of A$11.69 billion (A$1 = $0.6731) in its trade balance – lower than the expectations for A$12.50B as well as December’s figure at A$12.24B – demonstrating that it is still an economic powerhouse despite the decrease in exports and imports across the country.

Although exports rose by 1 per cent from the past month, coal exports experienced a slight decline – no doubt affecting total export figures. Metal ores saw an impressive 13 per cent increase in January compared to the prior month.

As China has relaxed its anti-COVID regulations, its economic revitalization is anticipated to increase Australia’s commodity exports in the upcoming months. After all, China is Australia’s topmost trading partner and thus stands as a promising driver of restored commodity demand.  

“The weak export growth likely reflects both poor external demand as well as the supply disruptions due to COVID outbreaks,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

Australian imports experienced an impressive 5 per cent leap from the prior month, with car imports alone rising by a remarkable 31 per cent. Industrial transport equipment also contributed substantially to the increased import statistics.

Despite the rising inflation and escalating interest rates, trade indicators demonstrate that domestic demand in Australia remains firm.

Chinese demand recovery could help maintain the Australian economy afloat during the upcoming months.

In the fourth quarter, Australia’s economic growth decelerated significantly; however, its exports lent support to keep it in a state of expansion.

As the most prosperous iron ore producer on a global scale, and second largest exporter of coal, this country is undeniably leaving its mark.

Even though the Australian economy is still strong, the Reserve Bank of Australia has enough leeway to continue hiking interest rates. It is set to raise them by another 25 basis points later today to prevent skyrocketing inflation.

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