Australia’s trade balance on goods made an unexpected swing in May to record the largest deficit in more than a decade. The Australian Bureau of Statistics reported that the balance on goods recorded a deficit of A$3.02 billion in May. The figure was way off the forecasts of an A$2.2 billion surplus.
A sharp increase in imports outstripped robust export growth, which points to a marked shift in trade dynamics on the back of resilient domestic demand.
The deficit was attributed to a drastic fall in the exports of gold, iron ore, and rural goods. It scarcely compared to the surplus of A$1.38 billion recorded in April. The deficit was the biggest shortfall on record since late 2015.
Compared to the April balance, exports declined by 6.9%, mainly driven by major declines in non-monetary gold and iron ore. On the other hand, imports increased by 2.6%, driven by increased imports of industrial inputs, consumer goods, capital equipment, and telecoms.
The deficit may trigger a reassessment and weigh heavily on expectations for Australia’s second-quarter economic growth.