The Australian government has announced that the country recorded a seasonally-adjusted trade deficit of $556 million in July, as a softening of commodity prices and demand led to a fall in exports.
According to figures released on September 7 by the Australian Bureau of Statistics, the export of goods and services dropped 2.7 percent month on month to $25.8 billion. On year-on-year basis, the fall was 1.5 percent. The value of imports, meanwhile, was down 1.5 percent, to $26.3 billion month on month, but up six percent compared to the same month last year.
Australia's Trade and Competitiveness Minister Craig Emerson said the July data reflected a slight drop in prices and demand for Australian mineral and agricultural exports. However, he noted that the investment in mining and energy infrastructure is setting Australia up for a resources production boom. "We are building capacity to meet continued strong demand from rapidly-growing Asian economies in this, the Asian Century," he said.
For the 12 months to the end of July 2012, total exports to East Asia rose 9.6 percent, to $188.7 billion, compared to the previous 12 months.
Meanwhile, media sources have commented that the widened trade deficit of the country was largely due to declining gold and iron ore exports, and the recent fall in prices for the steelmaking ingredient is likely to lead a drop of earnings from August onwards. While prices for iron ore, Australia's biggest export, began to slide in July, an increase in volumes shipped helped limit the damage. Despite all the concerns of a slowdown in Chinese demand, exports of iron ore to the Asian giant actually rose in the month in question.
However, prices for the steelmaking mineral have continued to tumble, to the late 2009 levels. Such a fall would threaten to cut earnings by perhaps A$20 billion, and that in return may crimp mining profits, dividends, wages and government tax receipts, according to media sources.