Australia's trade balance deficit widened in December as imports gained while the surging local currency kept corroding exports earnings. The widening trade deficit shall pressure monetary policy makers to keep interest rates unchanged over the coming months after deciding to keep it steady at 3.75% yesterday.
The trade balance deficit widened to A$2252 million in December following a revised deficit of A$1728 million from A$1700 million, and it came less than analysts' estimates of A$2400 million.
Imports gained 6% in December to record A$22 billion, having imports of oil and gasoline rising 26%, while gold imports jumped 51%.
On the other hand, Exports showed more progress climbing 4% to record A$19.8 billion as demand in different markets is recovering. Today's report showed that farm shipments surged 7%, while coal exports rose 10%.
The surging Australian dollar is threatening the exports sector as it makes Australian products lose a competitive advantage. The AUD gained 28% against the U.S dollar last year especially that the second half of 2009 carried many clear signs of recovery in the labor market and different economic sectors that boosted demand for the Australian currency.
Global demand remains below levels witnessed in 2008, which represents another threat for the Australian shipments, keeping in mind that concerns are spread in markets about the strength of the world demand after withdrawing stimulus measures.
However, still signs of optimism founded as the Chinese economy continued supporting Australian exports especially with the Chinese manufacturing sector continue to rebound adding demand for raw materials and primary goods, worth mentioning that China is Australia's main trade partner.
The Reserve Bank of Australia decided yesterday to keep interest rates steady at 3.75% after raising borrowing costs in three straight meetings from a half century low. The RBA needs more time to monitor the impact earlier rate raises as its effect still limited, and the bank is also trying to control the surging AUD to support the nation's shipments.
Economic growth slowed to 0.2% in the third quarter of 2009 from the previous three months when it grew 0.6%, while the nation's GDP expanded an annual 0.5% in the three months ended September following an expansion by 0.6%.
Yet, the continuous rebound in the Chinese manufacturing output, besides improving conditions in other major economies, makes us anticipated demand to increase this year which is in the favor of Australian exporters. Recovering raw materials prices is also boosting exports value after we witnessed commodities dropping sharply by the end of 2008 and the beginning of 2009.
The trade balance deficit widened to A$2252 million in December following a revised deficit of A$1728 million from A$1700 million, and it came less than analysts' estimates of A$2400 million.
Imports gained 6% in December to record A$22 billion, having imports of oil and gasoline rising 26%, while gold imports jumped 51%.
On the other hand, Exports showed more progress climbing 4% to record A$19.8 billion as demand in different markets is recovering. Today's report showed that farm shipments surged 7%, while coal exports rose 10%.
The surging Australian dollar is threatening the exports sector as it makes Australian products lose a competitive advantage. The AUD gained 28% against the U.S dollar last year especially that the second half of 2009 carried many clear signs of recovery in the labor market and different economic sectors that boosted demand for the Australian currency.
Global demand remains below levels witnessed in 2008, which represents another threat for the Australian shipments, keeping in mind that concerns are spread in markets about the strength of the world demand after withdrawing stimulus measures.
However, still signs of optimism founded as the Chinese economy continued supporting Australian exports especially with the Chinese manufacturing sector continue to rebound adding demand for raw materials and primary goods, worth mentioning that China is Australia's main trade partner.
The Reserve Bank of Australia decided yesterday to keep interest rates steady at 3.75% after raising borrowing costs in three straight meetings from a half century low. The RBA needs more time to monitor the impact earlier rate raises as its effect still limited, and the bank is also trying to control the surging AUD to support the nation's shipments.
Economic growth slowed to 0.2% in the third quarter of 2009 from the previous three months when it grew 0.6%, while the nation's GDP expanded an annual 0.5% in the three months ended September following an expansion by 0.6%.
Yet, the continuous rebound in the Chinese manufacturing output, besides improving conditions in other major economies, makes us anticipated demand to increase this year which is in the favor of Australian exporters. Recovering raw materials prices is also boosting exports value after we witnessed commodities dropping sharply by the end of 2008 and the beginning of 2009.
