Australia recorded its highest ever yearly trade surplus in calendar 2020 of more than $72 billion, according to data from the Australian Bureau of Statistics yesterday contained in the December trade report.
2020’s performance came despite the negative impact of COVID in some export markets, but that was more than offset by the boom in iron ore prices thanks to China’s economic rebound.
A slide in imports helped boost the surplus and for that the impact of COVID on some areas of domestic demand helped (such as vehicles, SUVs and trucks). The sharp slide in the value of oil prices (and therefore petrol imports) was also a big positive.
Lower LNG and coal prices (the latter due to China’s blocking of coal imports from Australia) didn’t help, nor did lower exports of barley, honey, wood, meat and wine to China.
Prices for LNG and coal staged a small recovery in late November and December as a very cold winter gripped parts of northern Asia and the US, dragging up LNG prides especially in China, Japan and Korea (which boosted the value of spot sales).
The 2020 record helps explain why the Reserve Bank’s commodity price index hit a decade high in January (in US dollar terms, which is relevant because every major commodity is priced in US dollars).
In original terms, the balance on goods and services for 2020 was a surplus of $72.7 billion, up, according to ABS data by $5.2 billion on 2019’s surplus of $67.5 billion.
Imports of goods and services fell $63.9 billion (15%) while exports of goods and services dropped 12% or $58.7 billion.
For the December quarter, the ABS said that the surplus rose to $18.335 billion, seasonally adjusted. That was a rise of $4.806 billion on the surplus of $13,529 billion for the September quarter.
The ABS pointed out that if seasonal factors used in compiling the quarterly balance of payments are applied, the preliminary December quarter 2020 surplus was $17.443 billion, an increase of $3.794 billion on the September quarter 2020 surplus of $13.649 billion.
Meanwhile the trade surplus for December of $6.785 billion was down sharply from the goods surplus of nearly $9 billion, reported by the ABS on January 25.
Exports of goods and services credits in December rose 3% or $1.010 billion to $37.268 billion. Good exports in the month totalled $34.9 billion.
Imports of goods and services fell 2% or $761 million to $30,483 billion. Goods imports totalled $26 billion in December, according to the preliminary report on January 25.
The trade surplus in November was just over $5 billion.
