For some years now trade figures have been greeted with a mix of resignation. Australia has, for many years, imported more than it has exported, with the balance financed by borrowing from overseas investors or selling assets to them.
However, those days may have come to an end. The mining investment boom has led to greater volumes of coal and iron ore being sold. It’s not just export volumes. According to Westpac senior economist Andrew Hanlan, prices have risen as well, especially prices for coal. “The trade position improved dramatically over the second half of 2016 as a spike in commodity prices, particularly coal, boosted export earnings.”
Normally, markets note the Australian trade figures, figuratively shrug their shoulders and move on. However, the presence of a large Q4 trade surplus greatly reduces the likelihood of a negative December quarter GDP figure. This is relevant in the context of a negative September quarter GDP figure. Two negative GDP figures in a row constitute the technical definition of a recession and confidence would have taken a hit.