Australia’s Trade Surplus Narrows

Australia’s trade surplus narrowed in December by more than economists forecast as coal and metal exports declined., 2/2/2009 7:50:40 PM

The surplus shrank to A$589 million ($372 million) from a revised A$979 million in November, the Bureau of Statistics said in Sydney today.

The worsening trade balance adds to evidence Australia is being battered by the slump in global demand for natural resources. Concern the economy has already fallen into its first recession since 1991 prompted central bank Governor Glenn Stevens to cut borrowing costs to the lowest level since the 1960s. Australia’s government also announced today second stimulus package.

Exports fell 3 percent to A$25.7 billion in December, the report showed. Coal and metal shipments both slumped 11 percent.

Australia’s economy may already have followed the U.S., U.K., Japan and Europe into a recession after gross domestic product rose just 0.1 percent in the third quarter, the weakest pace in eight years.

Miners BHP Billiton Ltd. and Rio Tinto Group are among companies firing workers and trimming investment plans as overseas orders for natural resources fall.

BHP Billiton said last month it will shed 3,400 workers in Australia as it shuts a nickel mine, closes part of a refinery and reduces coking coal output by as much as 15 percent.

Rio Tinto said on Jan. 14 it will cut production and slow spending on a A$1.86 billion expansion of its Argyle diamond mine in Western Australia, potentially cutting as many as 200 contract positions.

Reports published this year show the nation’s jobless rate rose to a two-year high of 4.5 percent in December as companies slashed 43,900 full-time jobs, bank lending unexpectedly fell for the first time since 1992, manufacturing contracted in January for an eighth month, and house prices dropped for a third straight quarter.

Imports slid 2 percent in December to A$25.1 billion. Fuel imports tumbled 14 percent.

Australia’s Trade Surplus Narrows