Australia's Trade Balance Deficit Narrowed In September Along With Rising Exports

A report today showed that Australia's trade balance deficit narrowed in September more than expected as exports continued to improve along with recovering world demand that helped the Australian exports sector to recover.

Australia's trade balance deficit narrowed in September recording A$1849 million compared with a previous deficit of A$1651 million that was revised to A$1651 million and it came better than the analyst's forecasts of A$2150 million.

However, exports gained 5% in September recording A$20.2 billion as coal shipments surged 9%, while imports inclined by 5% to record A$22.1 billion as consumer goods imports rose 2%, while fuel imports rose 71%.

Rising exports is adding to signs of recovery in the Australian economy that is performing stronger than forecasts. Demand from China for natural resources supported the Australian exports sector to participate effectively in the recovery process, having in mind that governor Stevens said that economic recovery in China is supporting the local economy.

The Reserve Bank of Australia raised interest rates twice in four weeks after the nation's benchmark was cut by 4.25% to reach 3.00% the lowest in 49 years, then came the first rate hike this year by 25 basis points in October followed by a similar decision this week making interest rates reach 3.50%.

Raising interest rates helped the Australian dollar to appreciate against its American counterpart that is threatening Australian exporters making Australia's products less competitive, noteworthy that the AUD recorded the its highest against the U.S dollar this year at 0.9326 on October 21.

On the other hand, recovering commodity prices is adding Australia's shipments value which that is in the favor of Australian companies that is anticipating higher profits by the end of this year after losses incurred in the first three months.

The Australian economy expanded 1.0% in the first half of this year avoiding technical recession and performing better than other major economies that still looking for its way out of the financial crisis the worst since the great depression.

Yet, Treasurer Wayne Swan expects the economy to grow 1.5% in the in the 12 months ended June 30, 2010 compared with earlier forecasts of a contraction by 0.5%, while economic growth is expected to accelerate to 2.75% in the next fiscal year.

Ecpulse

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