Although the recent trade data revealed a surprise deficit, Australia’s export volumes are likely to improve in the first half of this year, but their impact may dissipate in the remaining half, Tom Kennedy, an economist at J.P. Morgan, said.
The trade balance showed a deficit of A$628 million in November versus a surplus of A$105 million in October, official data showed on January 4.
“There were also downward revisions to the past few months, taking some of the shine off the recent performance of the external sector and marking a notable turnaround from the first half of 2017,” the economist observed.
Looking ahead, we remain upbeat on the near-term prospects for Australia’s external sector given the anticipated surge in LNG production and accompanying lift in export growth, J.P. Morgan added.
Most of the major investment projects currently under construction are expected to be completed by mid-year, meaning the impulse from rising export volumes should dissipate in the second half of 2018, Kennedy said.
And at this point, Australia’s trade data will become even more closely tethered to commodity price performance, the economist added.
The material has been provided by InstaForex Company – www.instaforex.com
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