KEY POINTS
- The monthly trade surplus narrowed to $417 million in December 2008 (current prices)—this follows a (revised) trade surplus of $778 million in November.
- Japan is Australia's largest export market, accounting for $50.6 billion in 2008 (free on board value terms). This is followed by China ($32.5 billion), Republic of Korea ($18.5 billion) and India ($13.5 billion).
- Resource and manufactured export volumes have continued to expand strongly over the past year and services sector export volumes have also contributed strongly.
- ABARE forecasts that earnings from Australia’s commodity exports will fall by 17 per cent to $161.7 billion in 2009-10, compared with an estimated rise of 33 per cent to $195.7 billion in 2008-09. This expected fall in earnings largely reflects a forecast decline in earnings from mineral resources. Earnings from farm exports are forecast to increase in 2008-09 and 2009-10.
- The Australian dollar, measured by the RBA's trade weighted index has depreciated strongly in recent months. However, the depreciation of the exchange rate has coincided with a significant improvement in Australia's net trade position, with exports remaining solid while imports have declined.
FACTS AND FIGURES
The monthly trade surplus (current prices)—as reported in the ABS international trade in goods and services publication—totalled $417 million in December 2008, down from a $778 million trade surplus recorded in November. Australia recorded a trade deficit of $1.6 billion in December 2007.
Total exports declined by 5.0 per cent in December 2008 in value terms to $24.2 billion—this is 27.7 per cent higher than the same month of the previous year. This monthly decline was driven by non-rural and other goods exports which fell by 6.7 per cent in December. Services goods exports rose slightly by 0.5 per cent in the month.
Total imports declined by 7.3 per cent in December to $23.3 billion—this is 13.2 per cent higher than the corresponding month a year ago.
Exports by industry
Total industry exports (current prices) totalled $279.3 billion over 2008—this is 140.0 per cent higher than the total for 1998.
- Agricultural exports accounted for 3.8 per cent of total exports in 2008, down from 8.5 per cent in 1998.
- Mining exports accounted for 39.2 per cent of total exports in 2008, well above the 18.8 per cent in 1998.
- Manufacturing exports accounted for 33.8 per cent of total exports in 2008, down from 45.8 per cent in 1998.
- Services exports accounted for 19.5 per cent of total exports in 2008, slightly down from 23.5 per cent in 1998.
- Exports not specifically classified to an industry (due to not readily being classified and/or confidential) account for the remainder (approximately 3 per cent of total exports).
Export volumes and values
Export volumes growth—as reported in the ABS balance of payments—was flat in the September quarter 2008 to be $58.1 billion and 5.0 per cent higher through the year, while export values grew by 1.6 per cent to $69.0 billion. Both resource and manufactured export volumes have continued to expand strongly over the past year and services sector export volumes have also contributed strongly. Over the 10 years to the September quarter 2008, export volumes have increased by 40.6 per cent, while export values have dramatically increased by 135.6 per cent (see chart 1).
The Australian dollar, measured by the RBA's trade weighted index has depreciated strongly in recent months. However, the depreciation of the exchange rate has coincided with a substantial increase in Australia's terms of trade—reflecting among other things, the strength in commodity prices. The terms of trade (which is at its highest ever level) represents a sizeable boost to national income. Resources prices are no longer rising rapidly.
Australia's export destinations
Export volumes—as reported in the ABS balance of payments—edged down by 0.8 per cent in the December quarter 2008 to be $57.3 billion and 3.9 per cent higher through the year, while export values grew by 8.0 per cent to $79.9 billion. Both resource and manufactured export volumes have continued to expand strongly over the past year and services sector export volumes have also contributed strongly. Over the 10 years to 2008, export volumes have increased by 35.3 per cent, while export values have dramatically increased by 174.2 per cent (see chart 1).
The Australian dollar, measured by the RBA's trade weighted index has depreciated strongly in recent months. However, the depreciation of the exchange rate has coincided with a significant improvement in Australia's net trade position, with exports remaining solid while imports have declined. The terms of trade have recently edged down following years of strong growth.
Australia's export destinations
Japan is Australia's largest export market, accounting for $50.6 billion in 2008 (free on board value terms). This is followed by China ($32.5 billion), Republic of Korea ($18.5 billion) and India ($13.5 billion). China is Australia's largest two-way trading partner (imports and exports), followed by Japan, the United States and the Republic of Korea.
Agricultural and resource export forecasts
In its Australian commodities report, the Australian Bureau of Agricultural and Resource Economics (ABARE) forecasts that Australia's commodity export earnings will fall by 17 per cent in 2009–10 to $195.7 billion.
ABARE believes that minerals and energy exports will be the primary driver of the increase—expected to decrease by 22 per cent to $125.6 billion. The expected fall in export earnings forecast for 2009–10 reflects a decrease of 34.2 per cent in energy exports (driven by sharply dropping coal and oil prices). Metals and other mineral exports are also expected to decline—by 10.9 per cent, reflecting a lower contract price for iron ore.
Export earnings from the farm sector are expected to increase by 4.4 per cent to $32.1 billion. ABARE forecasts that agricultural exports will increase in wheat, barley, canola, lupins, peas, raw cotton, sugar and lamb.
Chart 1: Export volumes and values
Source: ABS Cat. No. 5302.0