Australian trade balance surplus narrows during July as exports retreats

The Australian economy released today the trade balance for the month of July, showing a narrow surplus as the nation's exports of coal and iron ore (which are one of the main pillars for economic growth in Australia) retreated, while the imports increased. 

The trade balance surplus narrowed to A$1888 million in July, compared with a previous reading of A$3539 million that was revised to A$3438 million, and it came less than analysts' estimates of A$3100 million. 

Imports gained 2.0% in July to record A$23.5 billion, while the main reason behind imports gain is that the Australian department of defense purchased a six super hornet fighter jets. 

On the other hand, exports showed more progress declining by 4.0% to record A$25.4 billion during the month of July. Today's report showed that the shipments of coal plumbed 16% and iron ore declined. 

According to the yesterday's report, which showed that the gross domestic product in the second quarter of the year, expanded more than analysts' expectations. GDP widened by 1.2% during the second quarter from 0.5%.

Furthermore, the weaker trade balance may push the economy to retreat in upcoming period, from that expanded last quarter by the most in three years, as a record mining industry investment boom, supported household spending to increase (which accounts for more than half of gross domestic product). 

Australian policy makers indicate that slowing global growth may push policy maker to keep interest rates unchanged at 4.5% during September for the fourth consecutive month. Also Australian policy maker expects that annual economic growth to accelerate by 4.0% at the end of 2012. 

The governor of the Reserve bank of Australia Mr. Glenn Stevens, announced that the nation's economy is expanding, which is the main reason behind rising interest rates when the rate was raised six-times from the last seven meetings since early October. 

Yet, analysts reported that the trade balance declined as the flexibility in commodity prices, which are moving into the third quarter along with weaker demand from Asia pacific.