Your editor never misses a chance to point out when the trade deficit data is bad. After all, it’s evidence of an economy that over-consumes and under produces. But it’s only fair we pass on the good news too, if and when there is any.
The Australian trade deficit narrowed to just $427 million in December, according to figures released yesterday by the Australian Bureau of Statistics. Yes, it’s still a deficit. But it’s a much smaller deficit than the $2.8 billion deficit in November. And what do you have to thank for that big improvement?
Iron ore, of course. In what could be one last hurrah for its power to improve economic perceptions, iron ore prices were up 12% for the month, according to the ABS. With a 20% increase in export volumes, that was enough to drive an overall 3% increase in exports. With imports down 6% in the same time, the deficit was narrowed (although not eliminated).