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
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 (
) 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