The collapse, driven by plunging exports and surging imports, has heightened concerns over the economy’s vulnerability to global demand shifts, triggering a selloff in the Australian dollar.
Exports Suffer Sharpest Drop in 11 Months
Goods exports cratered 6.2% month-on-month, the largest decline since March 2023, with coal shipments (-12%), liquefied natural gas (-8%), and agricultural products leading the downturn. Analysts linked the slump to China’s uneven industrial recovery and softening commodity prices. “This isn’t a temporary dip but a sign of deteriorating trade fundamentals,” said RBC Capital Markets strategist Su-Lin Ong.
Import Boom Deepens Trade Imbalance
Imports defied expectations with a 4.1% surge, fueled by increased purchases of machinery, consumer goods, and gold (+23%). The rise suggests resilient domestic demand despite high interest rates but exacerbates pressure on Australia’s external accounts. Gold imports alone hit a 15-month high, reflecting investor flight to safety amid global uncertainty.
AUD Tumbles Below 0.6520 on Growth Fears
The Australian dollar slid 0.6% post-data, breaching the 0.6520 support level as traders priced in weaker terms of trade. The surplus contraction complicates the RBA’s policy path, with markets now pricing a 40% chance of a 2024 rate cut. “A shrinking trade buffer limits the central bank’s ability to tolerate currency depreciation,” warned ANZ FX strategist John Bromhead.
Structural Risks Emerge for Resource-Driven Economy
The trade balance deterioration threatens Australia’s current account surplus streak, which had persisted since Q3 2022. Iron ore prices, down 18% year-to-date, and cooling LNG demand signal deeper challenges for the resource sector. Analysts estimate the February data could shave 0.2% off Q1 GDP growth, with full-year export revenues projected to fall 7%.
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