Australian Trade Balance Shrinks

 Australian Trade Balance Shrinks

Australian Trade Balance For February Touched 5-Month Low

Australia's trade balance in February dropped to near 5-month lows due to weak exports. According to details, iron ore is the major export product of Australia which has dipped lower in February.

Overall, the trade balance has dropped to nearly $4.79 billion, which is equivalent to A$7.28 billion. So, while the iron exports have gone down, Australia is still enjoying a sizable trade surplus.

Australia Posts Surplus Of A$10.5 Billion

According to the markets, a surplus of A$10.5 billion, which means the actual value was short by around A$3 billion. The bigger picture is that the AU trade balance is now sitting at its lowest levels, seen on September 2023.

During February, the exports dropped by almost 2.2%, mainly due to the weak demand for minerals and metal ores. And if we look at the exports of metal/minerals, in particular, the drop was around 8.1% m/m.

The overall exports of iron ore took the biggest hit, and a decline of 11 - 16% was noticed, according to the data. The apparent weakness seen in the iron ore exports is due to soft demand from China.

Additionally, China's property sector is also going through a sustained downturn. As a result, the demand for iron for construction projects has also taken a major blow.

One of Australia's biggest export partners is China, which means any downturn in China will also affect the Australian economy. While the iron exports have dropped, a jump was seen in the export of metal, fuel, and coal.

Overall, a 4.8% jump was seen in Australian imports in February. Given that demand for consumer goods will likely remain strong, the imports will jump next month as well.

In the long-term, there's little chance that there will be any strong demand stemming from the Chinese economy. As a result, Australia's trade balance may get even worse in the next few months.

Trending Stories