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Australia’s July trade deficit narrows on surge in gold exports

Australia’s trade deficit rebounded much better than projections in July. The nation’s trade balance declined to AUD 2.4 billion, driven by AUD 0.9 billion hike in volatile gold exports, with most other resource exports weaker. Trade deficit narrowed from a downwardly revised AUD 3.25 billion in June. Exports in the month were up 2.8 percent, with gold exports driving the increase. Exports of gold are quite volatile; however, the surge in July stands out with a 62 percent rise in July or AUD 0.9 billion.

Excluding gold, Australia’s exports felt.  With the massive size of the rise in gold, exports excluding gold declined 1.1 percent in July. The subdued exports were mainly because of a decline in other resource exports that fell 2.6 percent in July. Volumes of iron ore dropped in July, whereas coking exports declined sharply, supporting he hike in spot prices. Meanwhile, volumes of LNG exports continued to increase at a robust pace.

After recording strong gains in the earlier two months, imports fell slightly. Total imports dropped 0.4 percent in the month, where the weakness was evident in imports excluding volatile items that declined 3.2 percent. Imports of consumption goods, which fell 6 percent, mainly drove the decline in imports. This greatly countered the solid rise in the previous month. Imports of capital goods also came in weaker, falling 1.2 percent in July.

Net tourism and education exports continued to rise, although the rate of growth has eased slightly. Monthly expansion decelerated to 2.3 percent in July, following a 2.9 percent rise in June.

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