The trade deficit was smaller than expected in September, coming in at $284mn. Market consensus was expecting adeficit around $500mn (CBA (f): 350mn). The ABS has increased the scope of how imports are measured and are nowincluding imports under the “Low Value Threshold” (or under $1000) to better measure the value of online consumerspending. These revisions mean that imports have been revised upwards and the trade balance has now spent the entireyear in deficit (previous calculations assumed small trade surpluses in the beginning of the year). Looking ahead, exportprices for key bulk commodity exports are expected to stay at relatively high levels. And export volumes will continue torise as mining projects finish construction and begin exporting. The Aussie dollar is expected to depreciate which will keepimport prices elevated. The slowdown in mining construction also means that capital goods imports (which have beenused in the construction phase of projects) will fall. These factors should see the trade balance move back into surplus in2014.
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Commonwealth Bank