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Australia’s trade deficit widened less than economists predicted in October as exports withstood a slower global economy and capital goods purchases increased.
Imports outpaced exports by A$2.09 billion ($2.2 billion), compared with a revised A$1.42 billion deficit in September, the Bureau of Statistics said in a report in Sydney today. The median estimate in a Bloomberg News survey of 24 economists was for a deficit of A$2.2 billion.
Central bank Governor Glenn Stevens has reduced interest rates four times this year to 3 percent as prices of the nation’s biggest commodity exports ease. Policy makers are trying to revive demand outside of a resource boom that may crest in the first half of next year at a lower level than previously expected.
“The price declines in iron ore and coal earlier in the year have weighed heavily on Australia’s exports,” Stephen Walters, JPMorgan Chase & Co.’s chief economist in Australia who predicted a A$1.6 billion shortfall, said in research report before the release. “The resources boom still requires large amounts of machinery and equipment for building and construction, which are mostly sourced from offshore and will keep Australia’s demand for imports elevated.”
Exports were little changed at A$24.4 billion, as a 6 percent drop in coal was partly offset by a 3 percent rise in metal ores and minerals, today’s report showed. Imports advanced 3 percent to A$26.5 billion on a 13 percent increase in capital goods purchases, the report showed. Fuels and lubricants imports rose 5 percent.
“Key commodity prices for Australia remain significantly lower than earlier in the year, though trends have been more mixed over the past few months,” Stevens said in a statement after cutting rates to 3 percent this week. “The terms of trade have declined by about 15 percent since the peak, to a level that is still historically high.”
Prices of the nation’s key export, iron ore, have rebounded since reaching a three-year low on Sept. 5 after China announced spending on new subways and roads.
The Australian dollar was little changed at $1.0482 at 11:43 a.m. in Sydney, compared with $1.0481 before the data were released.
Australia’s economy has been driven by a resource bonanza for iron ore, coal and natural gas that is bringing record investment in projects. The nation’s unemployment rate, at 5.2 percent in November, is lower than 7.9 percent in the U.S. and 11.7 percent in the euro area.
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