ABS figures bring call to look beyond mining
Figures show Australia's trade deficit narrowed in May, but the record trade deficit from April has been revised to be even wider.
April’s deficit is now considered to have been more than $4.1 billion.
ABS figures show Australia imported $2.75 billion more in goods and services than it exported in May, seasonally adjusted.
It is an improvement on April’s numbers, driven by both a 1 per cent recovery in exports and a 4 per cent fall in imports.
Key drivers of the export improvement were an increase in commodity revenues and a recovery in prices and export volumes.
Ores and minerals, iron ore in particular, were up 6 per cent ($319 million), while coal exports bounced back by 9 per cent ($268 million) after port closures held up shipments in April.
Metals exports increased by $128 million (17 per cent).
But after April’s weakness, the rebound in mining exports brought a bigger trade deficit than the $2.2 billion that was expected, and disappointed analysts as well.
In fact, Australia’s heavy reliance on three major exports has led economist Andrew Charlton to ask; “Is Australia still a developed economy?”
“Before the boom, Australia's export concentration was broadly in line with other similar high income countries. But by 2010 our export concentration had soared,” Dr Charlton wrote this week.
“Today our exports are more concentrated than the average of even the middle income countries, and even some low income countries like Nepal, Kenya, and Tanzania have greater export diversity than Australia.”
Dr Chalrton, who now runs economics consultancy firm AlphaBeta, says Australia is clearly still one of the world’s advanced economies, but he says that Australia’s economy is still dangerously exposed to commodity price fluctuations.
“For a decade, Australian governments have been operating on the assumption that, once the mining boom passed, low interest rates and a falling dollar would be enough to bring the non-resource sectors dancing out of their graves,” he argued.
“Unfortunately, no such resurrection is occurring.”