Soaring commodity prices have helped Australia record its first trade-balance surplus in almost three years.
The $1.2bn trade surplus, recorded in November, comes at a crucial time for the treasurer, Scott Morrison, who is preparing his next budget due in May.
The trade figures also suggest the economy might avoid a technical recession – a serious concern after last year’s shock three-month contraction in economic activity.
They could also help Australia record its smallest current account deficit since early 1980, which could reassure rating agencies worried about the external balances.
Australian Bureau of Statistics figures show the country enjoyed its biggest positive turnaround in the balance of trade since April 2010, with surging iron ore and coal prices swinging it from a $1.1bn deficit in October to a $1.2bn surplus in November.
The trade balance compares the total value of exports and the total value of imports (taking account of prices and volumes).
Exports rose 8% in November, helped by rising commodity prices and coal export volumes, while imports were flat.
Coal exports were $900m higher than in the previous month, metal ores and minerals were up by $700m, and rural goods by $600m.
LNG exports, mainly in volume terms, are 20% higher than a year ago. Economists believe there will be another 40% rise in LNG exports by mid-2018 when all plants hit their peak export output.
The Turnbull government is preparing to begin its formal review of the petroleum resource rent tax regime (PRRT), announced in November.
Morrison, who wants the tax to be reviewed in time for the budget, is concerned that revenues from the PRRT have halved since 2012-13, while crude oil excise collections have fallen by more than half.
“The stars are finally starting to align for Australia’s trade numbers,” Paul Bloxham, HSBC Australia’s chief economist, said.
“Up to this point, much of the positive impact on the economy from the boost to export volumes, from newly built capacity, has been offset by declining commodity prices.
“As Australia, and others, have put more iron ore, coal and other materials onto the global market, commodity prices had been falling, weighing on local incomes.
“But commodity prices now appear to be past the trough and Australia still has more capacity coming on line. As a result, resources exports are now also picking up strongly in value terms, not just volumes.”
Bloxham said this had positive implications for the economy, because nominal GDP – the income received from the goods the country produces – would get a big boost.
“This should lift local incomes, corporate profits, tax revenues and flow through to wages growth [which] should support inflation and keep the Reserve Bank from needing to cut further,” he said.
The NAB economist Tapas Strickland said the strong trade numbers should dispel fears that Australia could repeat the surprisingly weak GDP figure in the September quarter.
“The increase in trade volumes in November ... if repeated in December should see the trade balance add to fourth quarter GDP growth,” Strickland said.
“This should eliminate fears out there that Australia was at risk of recording a ‘technical recession’ after the weak third quarter GDP figures.”
Michael Workman, a senior economist at Commonwealth Bank, said trade surpluses should continue for the next six months.
“Australian producers will benefit, along with the state and federal governments as profits and tax payments rise,” he said.
