The November trade shortfall of $118m came in much lower than market expectations which centred on a $300m deficit{CBA (f) -$600m). Australia has been running monthly trade deficits since December 2011. Deficits have primarily been aresult of the falling terms of trade. The decline in commodity prices over the past two years has seen the value of ourexports relative to imports fall. Trade deficits therefore become more likely until volumes are sufficient to offset the priceeffect. A softer AUD bodes well for export receipts, but will be pushing up the price of imports. The outlook suggestsexport volumes (especially of iron ore and LNG) will continue to pick up strongly in the next few years as the mininginvestment boom further morphs into the mining output and export “boom” phase.
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Commonwealth Bank