Australian Exports Down 2% in February
Australia's exports declined 2 per cent in February which contributed to a trade deficit of $480 million. It is the second largest trade deficit for the country since early 2010.
In January 2012, the trade deficit was higher at $971 million after 21 months of trade surplus.
The trade deficit could have been larger were it not for a significant decline in imports in response to tighter hold on purses by consumers and businesses. Imports of goods and services, consumption goods and machinery went down 4 per cent while that of textile, clothing and footwear dipped 17 per cent.
For the preceding quarter, exports of coal and rural goods were significantly lower, although it was the case for the bulk of Australian exports since August as sales dipped 12 per cent. Coal exports declined 19 per cent and metal ores and mineral exports tumbled down 10 per cent. Volume of hard coking coal exports actually went down 27 per cent while that of iron ore actually grew 16 per cent.
Citigroup economist Josh Williamson said the February trade deficit is due to the failure of commodity exports to rise from their fall in January.
HSBC chief economist Paul Bloxham said the foreign trade figure bolsters the chance that the Reserve Bank of Australia (RBA) may cut the overnight cash rate a little bit in the future and place some downward pressure on the Australian dollar.
Analysts, however, are not so alarmed by the second consecutive trade deficit.
"It's just as well that we don't worry about current account deficit these days," theage.com.au quoted BT Financial Group chief economist Chris Caton.
"The second consecutive trade deficit is unlikely to ease investor concerns about the extent of the slowdown in China.... Even more concerning is that rural exports have fallen for the fourth consecutive month. It adds to the array of reasons why the Reserve Bank should be cutting rates," added Commonwealth Securities economist Savanth Sebastian.
Bloomberg reports that traders are forecasting an 87 per cent chance that the RBA would cut borrowing rates by 25 percentage points at the May policy meeting. The Australian central bank kept on Tuesday the current overnight cash rate at 4.25 per cent.
