Australia’s exports seem to have increased in August

Exports in Australia seem set to be pulled in opposite directions in August, according to Societe Generale. Key commodity prices, on one side, have been increasing robustly, with iron ore prices rising 5 percent in AUD-terms from July, after an even larger rise in July. Coal prices have been rising sharply rising, with prices at Newcastle port rising 12 percent in the USD terms in August.

It is evident that these developments would stimulate exports. But, a considerable pullback in gold exports from Australia is expected after they rose sharply by 62 percent or by AUD 912 million in July and added 3.5 percentage points to the monthly rise of 2.8 percent.

Even if gold exports were on an upward trend after flat lining for around eight years or so, July’s level of exports is almost certainly unsustainable, noted Societe Generale. A small rise in exports is expected; however, with downside risks.

In the meantime, imports continue to look rather high given falling investment and quite modest consumption growth. Imports are likely to have dropped further by around 0.8 percent in August. This might result in a trade deficit of AUD 2 billion, the smallest shortfall in five months, added Societe Generale.