Australia’s trade surplus in March broke a record thanks to two major factors. The first one is that shipments of iron ore to China jumped in March as China’s economy came back from lockdown. Moreover, the export of gold tripled due to a gold rush for the safe-haven metal.
Interestingly there was also a rare surplus on services. Governments around the world implemented travel restrictions to contain coronavirus. As a result, Australians abandoned their travel plans.
Moreover, the trade surplus rose by 174% to A$10.6 billion ($6.79 billion) in March. Also, this result surpassed the expectations by more than A$3 billion.
The economy of Australia in the first quarter
Notably, the surplus for the entire first quarter of 2020 increased by 41% to A$19 billion. Hopefully, the surplus helped to boost the country’s economy before the lockdown began in earnest.
Moreover, after taking into account price effects, it is estimated that net trade provided a 0.4% ppt (percentage point) boost to gross domestic product (GDP) in the first quarter.
Also, as the Chinese economy began its path to recovery, the demand for commodities most likely will remain in the second quarter.
However, the state of the Australian economy is far from being ideal. The position of the Reserve Bank of Australia (RBA) shows the complexity of coronavirus pandemic. This week RBA warned the economic output for the first half of 2020 will likely fall by 10%. Also, the unemployment rate will double during the same period.
Nevertheless, during the last month of the first quarter exports jumped 15.1% while imports dropped 3.6%.
For example, exports of iron ore surged by a third to A$11.6 billion, as shipments recovered from cyclone disruptions in February. Also, Chinese factories got back to work in March.
Based on the information provided by the Australian Bureau of Statistics, gold earnings increased thanks to exports to Hong Kong and the U.K.
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