Australia’s trade balance outlook

Australia reported a trade gap of $2.90 billion in November 2015, a decrease of 11 percent from a downwardly revised $3.25 billion deficit in a month earlier. While December data indicates that imports declined notably faster pace than in November. Reduce level of tourism is the main reason behind the slower imports in Australia. Such weaker imports are a reflection of the fast-fading investment resources are booming in Australia. 

On the other side, due to the free fall in commodity prices, exports of goods and services are likely to increase further in 2016. According to the Societe Generale, Q4 export will increase around -1% qoq, while import growth would be positive at around 0.8%. However export prices are likely to fall by 5.4% qoq and import prices by 0.3% qoq. Such forecasts suggest a net export contribution of 0.5-0.75pp to quarterly GDP growth.