Despite slump Australia records $1.5-billion trade surplus in February

Showing signs of coming out of the uncertainties caused by the global economic crisis, Australia on Thursday announced an impressive $1.5-billion (A$2.1 billion) trade surplus in February 2009.

The latest data released by Australian Bureau of Statistics (ABS) shows that the seasonally-adjusted trade surplus for goods and services was more than double the surplus of A$926 million attained in January and by far exceeded economists' forecast of A$700 million for February. The peak surplus ever achieved was A$2.55 billion in last October.

''The February trade surplus is the second highest on record. It is also the seventh consecutive trade surplus,'' the acting trade minister Tony Burke said.

''The increase in exports was pleasing given the rapid deterioration in the global economy in recent months,'' Burke said in a statement.
 
The increase was mainly due to rise in exports of goods and services which rose 4 per cent to A$24.9 billion during the month whereas imports fell 1 per cent to A$22.8 billion. Robust exports primarily to China, Britain, India and the US, along with the government stimulus package have provided a buffer from the global turmoil.

"The increases in rural goods (up 6 percent) and machinery (up 12 percent) are particularly encouraging," Burke added.

''The way things are coming through with the retail sales and these trade numbers, it does seem possible we will get a small positive growth in the March quarter,'' an analyst with a trading firm said.

On the other hand, exports in February plunged across the region. Japan recorded a 49 per cent slump in exports followed by China 24 per cent, Singapore 22 per cent and Korea 18 per cent. 

''It appears Australia is the only country in the region - and the world, for that matter - that was exporting in February,'' he added.

The trade surplus was mainly due to rise in 'other goods' category including non-monetary gold, which was 49 per cent. Farm sector also performed well with a 6.1 per cent increase, while exports of minerals rose marginally.

''Trade is a stimulus to economic growth. It is an integral part of the solution to the current economic crisis. So, we must do everything to keep markets open and give exporters the opportunity to sell their products," Burke explained.

"The recent signing of the ASEAN-Australia-New Zealand Free Trade Agreement and the activation of the Australia-Chile Free Trade Agreement, demonstrates the Australian government's commitment to keeping markets open," he added.
 
Meanwhile, imports fell for the third month in a row due to purchase cutbacks by consumers. Import of consumption goods fell by 13 per cent mainly on account of passenger cars. Intermediaries also dropped by 5 per cent. However, there was an increase in the import of capital goods by 7 per cent indicating some revival in production.

Australian and NZ currencies gain

Australian and New Zealand dollars strengthened against other major currencies, further to increases in Australia' trade surplus as well as New Zealand's commodity prices.
Possibility of an additional stimulus package by the Australian Government also raised the sentiment.

It is also expected that the surplus in trade will prompt the Reserve Bank of Australia (RBA) to leave interest rates steady when it meets in Brisbane next Tuesday.

New Zealand's price index for commodities led by farm products also closed higher in March.

However, economists feel the gain in currencies could be moderated by a possible reduction in benchmark interest rate to 1 per cent by the European Central Bank. The benchmark rates are currently 3.25 per cent in Australia and 3 per cent in New Zealand.

Another factor could be a considerable decline in iron ore and coal prices as new contracts came into effect from 1 April.

Australian dollar rose 0.5 per cent to 70.30 US cents from 69.93 in New York yesterday. New Zealand currency was traded at 56.79 US cents from 56.78.