Economy - - Jan 06,2017
Australian economy is likely to stay optimistic as it posted a whopping A$1.243 billion ($912 billion) trade surplus in November, its first in almost three years.
The economy was boosted by a sustained rally in the prices of coal and iron ore, which surged in 2016 due to an increasing demand from China after it trimmed excess capacity and also on anticipations from US president-elect Donald Trump’s massive fiscal stimulus plan. Coal surged by 26 percent and iron ore went up by 11 percent.
Exports were also driven by rising global commodity prices, signaling for a potential rebound in the country’s economy after it contracted marginally in the third quarter.
The surplus of trade in international goods and services was A$1.2 billion in November, surprisingly better than the market forecast of A$500 million deficit. The Australian Bureau of Statistics (ABS) said that exports increased by 8 percent in the month, while imports were flat. They also said that there was an 8 percent leap in exports as compared to the previous month, where a deficit of A$1.12 was recorded.
There are considerable chances of Australian economy facing a contraction in the fourth quarter. It would be the country’s first recession in the last 25 years.
Economists are also arguing that even though export prices have jumped, there needs to be an improvement in the volume of goods exported to boost the country’s gross domestic product (GDP). At present, coal and iron ore, which are counted as the country’s top exports, are contributing significantly to improve this trade gap.
At the end of November, Australian shipments of steelmaking coal stood almost four times of what they were in the beginning of 2016. The government also expects a lift in exports from mid to late 2017, as mega liquefied natural gas projects come online.