2 October 2008

Australia Records Second Highest Trade Surplus on Record

Australia recorded a significant trade surplus of $1.4 billion in August, according to the ABS figures released today.

“This is a very welcome development,” said Mr Crean.

“This is the second highest trade surplus on record. It is a substantial $2.1 billion turnaround from the revised July trade deficit.

“At a time of global economic uncertainty the trade winds are blowing in Australia’s favour.

“Our healthy Budget surplus and early indications that Australia’s trade performance is now moving in the right direction gives us further reason to be confident that the Australian economy is well placed to withstand the global financial uncertainty.”

Key drivers of the surplus included a strong result in the resources sector, with coal exports increasing by $943 million and overall exports rising to a record $24.6 billion. Imports also fell $575 million in August.

Manufactured exports rose 7 per cent to $4.1 billion, reflecting a $141 million increase in metal exports, and rural exports grew 4 per cent to $2.3 billion.

In the year to August 2008, Australia’s fastest-growing major export markets were China, up around 26 per cent, Vietnam, up around 31 per cent and Singapore, up 27.5 per cent.

The August figures showed that services exports added $4.7 billion to Australia’s bottom line.

“If we are to further strengthen our economy and move to a more sustainable footing beyond the resources boom we need to improve our trade performance,” Mr Crean said.

“After recording 72 consecutive months of trade deficits under the previous Government, the August outcome indicates that we are finally moving in the right direction.

The Mortimer Report I released last month made it clear that if Australia is to stabilise its foreign liabilities it needs a significant improvement in its trade performance.

“The Rudd Government is implementing a new trade policy to open up new export market opportunities, to restore productivity growth and to enhance our level of international competitiveness.”

We have already made significant down payments to improve our export performance including:

• progressing more than 80 per cent of the WTO Doha Development agenda, with work continuing on this front;
• concluding FTA negotiations with Chile;
• concluding, jointly with New Zealand, an FTA with ASEAN;
• unfreezing and progressing FTA negotiations with China;
• progressing FTA negotiations with Japan;
• beginning the initial phase of FTA negotiations with the Republic of Korea;
• fast-tracking an FTA study with India;
• beginning preliminary work on possibly joining the Trans Pacific Partnership Initiative (comprising Chile, Singapore, New Zealand, Brunei and potentially the US); and
• providing an additional $50 million for the Export Market Development Grants scheme for 2009-10.

The Mortimer Report provides a range of recommendations to build on these down payments to further assist in ensuring our trade performance once again makes a strong and sustainable contribution to Australia’s economic growth.

The Government will respond to the Mortimer Report later in the year.

Media Inquiries: Mr Crean's office 02 6277 7420 - Departmental Media Liaison 02 6261 1555