AUSTRALIA’S trade data has become a key part of the ongoing debate about the global economic outlook and its impact on the economy.
But the latest trade report from the Australian Bureau of Statistics (ABS) is yet another indication of just how fragile the Australian economy has become.
The trade data is a key component of the economic outlook for the year ahead and its release comes amid growing pressure on the government to release more information about the economy in the coming weeks.ABS chief economist Steve Hockley said on Wednesday that the latest report showed the country’s trade deficit widened by a net $2.3 billion in January.
Mr Hockleys data showed a surplus of $4.2 billion.
ABS’ trade surplus in January was the third-biggest on record behind Japan’s $6.1 billion in 2015 and Germany’s $7.9 billion in 2009.
Despite the trade data showing a $2 billion deficit, the ABS said there was “some improvement” in the economy after falling to its weakest monthly figure in five years in January and February.
“The latest trade figures show that growth was faster in the second quarter of the year, with trade growth up 5.1 per cent compared with a year earlier,” the report said.
It said trade was a “major driver of the Australian economic growth and has underpinned our strong financial and industrial recovery”.
The ABS data is the latest sign that the economy is on the mend.
In February the Bureau said the economy had rebounded from the “troubled start” of the financial year.
Its second quarterly report on the economic figures shows the Australian dollar had weakened in January, which has hit exports, although the figures were revised upwards to indicate a $1.4 billion improvement in trade in February.
Economy in recessionAustralia’s trade figures come after the Federal Government said it had made a commitment to cut the trade deficit to $10 billion a year by 2019, and to reduce the trade gap by about $1 billion annually by 2020.
Economy has contracted, and trade is a major driver of this contractionABS said in its second quarterly trade data that the “trade deficit fell from a record $10.5 billion in February to $7 billion in March and $4 billion in April”.
“This was partly due to a decline in the value of the dollar, which helped offset some of the fall in the Australian currency.”
The trade gap was the biggest since the early 2000s and has been a mainstay of economic data.
Trade has been the key to Australia’s recovery since the financial crisis and is underpinned by the value-added tax, the mining tax, and the carbon price.
While the trade figures are a “big surprise” and a “significant blow to the Government”, they are “not unexpected”, Mr Hockings chief economist said.
“We’ve seen trade grow significantly, and if the current trend continues, trade will continue to grow at a very strong rate,” he said.
But he said the government should not be “fear mongering” about the trade situation.
There was “still a long way to go” to cut trade, he said, pointing to a $4 trillion trade deficit for the last five years.
What the ABS has releasedThis trade data shows that the country has been hit by a trade shock from China and the world has been worried about the effects of rising trade between the world’s two biggest economies.
On Wednesday the OECD, the world body for business, warned Australia’s trade situation could worsen, with the trade surplus set to widen again.
Chinese exports have risen in the past three months and the value added tax is expected to rise again.