Treasurer Scott Morrison is confident the downturn in exports that clipped the economic growth result in the final three months of 2017 won’t linger – and his optimism has been backed by the latest monthly international trade figures.
New data show exports jumped over four per cent in January, aided by a surge in manufactured goods sales, along with strong gold and LNG exports.
With imports also down two per cent, Thursday’s monthly trade balance made a sharp recovery to a $1.055 billion surplus after the $1.146 billion deficit in December.
Economists had expected a more modest surplus of $200 million.
The December deficit was only the second in over a year.
Wednesday’s national accounts showed the economy grew by just 0.4 per cent in the December quarter, the worst quarterly result since September 2016.
It saw the annual growth rate slip to 2.4 per cent from 2.7 per cent.
While household spending and non-mining investment showed healthier results, this was dented by weak exports.
“(Exports) were affected by three principal events and most of which won’t be continuing into the future,” Mr Morrison told ABC radio before the latest monthly trade figures.
These were the coming down from strong crop exports after a bumper harvest, weather-related coal mine shutdowns and the winding down of motor vehicle exports from the closure of the car industry in Australia.
Mr Morrison remains optimistic about the outlook beyond those events and the winding down of LNG projects.
Non-mining investment grew strongly over the year, people were spending more, while consumer confidence and business confidence and conditions are at very strong levels.
“All of that continues to give me confidence,” the treasurer said.
Westpac senior economist Andrew Hanlan said Thursday’s data was a welcome turnaround after exports subtracted a sizeable 0.4 percentage points from growth in the December quarter.
“Australia’s export performance is expected to improve in 2018 at a time of robust world growth and additional capacity in the LNG sector,” Westpac senior economist Andrew Hanlan said.
“The January outcome lends support to this view.”
Commonwealth Bank economist Gareth Aird said commodity prices have also been buoyant so far in 2018, especially for iron ore and coking coal.
“This points to a further improvement in the trade balance over February,” he said.