Australia’s Trade Records a Surplus of $5.9 billion, Experts Study What the Future Holds

Australia’s Trade Records a Surplus of $5.9 billion
Australia’s Trade Records a Surplus of $5.9 billion

After more than four decades, Australia has recorded a surplus of $5.9 billion, its first since the June quarter of 1975. According to some trade analysts, this leaves the economy vulnerable.

Flourishing iron ore prices and a low Australian Dollar has contributed to this trade surplus. The Australian trade terrain had not witnessed shattering changes. The economy saw some deficits, marked by peaked surplus in the 60s and some part of the 70s, with the last one recorded in 1975. Since then, the economy was not stranger to trade deficits. With the 80s showing the highest at $6.9 billion.

This year entered the first surplus in decades, opened many questions before analysts, as far as the country’s internal and external trade future. The reason for this surplus has been reverently pushed to commodity boom. China started rebuilding its economy, putting a strong front amidst trade wars and the halting of Brazilian iron ores, with threats of dam collapse, brought Australia to the center stage. But this surplus has high prices may not be here to stay, say some. The level iron ore prices were slashed 30% in August. This dealt with the surplus conveniently as commodity traders launched into buying them.

Another looming issue is foreign investors and investments. Australia has a large number of foreign investors and on an equal footing, ascending, are Australian investments overseas thanks to the allocated superannuation. However, the country still owes debt of $1.1 trillion more in fact — and net international liabilities passed through a trillion dollars for the first time. This may not be a burden as feared with the lowered dollar.

Reserve Bank’s deputy governor Guy Debelle, “When the exchange rate depreciates, the value of net foreign liabilities actually declines rather than increase. Australia’s net foreign liabilities, that is, how much we owe foreigners less how much foreigners owe us, have been declining for the past decade to be at their lowest as a share of GDP since the early 2000s,” he observed.