Wednesday, 09 January 2013 09:38
Lower commodity prices, along with a high dollar and strong imports, have pushed Australia's trade balance deeper into the red than at any time since the global financial crisis.
Australia's trade deficit widened to $2.637 billion in November, the biggest deficit since March 2008, Australian Bureau of Statistics figures released on Tuesday show.
It was the 11th month in a row the trade balance has been in deficit.
JP Morgan economist Ben Jarman said lower commodity prices had weighed on exports while imports, especially for cars and industrial machinery, remained strong in the month.
Exports rose 1 per cent in the month, while imports rose 2 per cent, according to the ABS figures.
"Essentially, everything is adding up to a very soft number," Mr Jarman said.
He said a recent rebound in commodity prices, particularly iron ore prices, had yet to be reflected in the trade figures and would see the deficit narrow over the coming months.
"The numbers will get better as we go through the first half of 2013 but we still think the trade balance will stay in deficit."
He said the high value of the Australian dollar also contributed to the large deficit.
The currency normally rises and falls roughly in line with commodity prices but remained stubbornly high in 2012 as prices fell.
"It sort of highlights the fact that the high Aussie dollar is a bit of a drag on national income," he said.
"Because we've had the drag from commodity prices without any offsetting help from the Aussie dollar, that has really exacerbated the weakness."
He said the trade figures would not be enough to prompt the Reserve Bank of Australia to cut the cash rate again in early 2013, but the central bank would become increasingly concerned if the balance remained in deficit as the year continued.
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