Australia's Commerce Crashes Into Shortfall As Coal Exports Remain Dammed Up.

As overseas sale of coal remained blocked by severe floods in Queensland, Australia announced a first monthly trade deficit since March 2010 in February. Consequently, the rising Australian dollar compelled an elevated import demand.

According to the Australian Bureau of Statistics (ABS), the value of imports rose 5 per cent, while exports dropped 2 per cent. The rate of thermal coal exports fell 18 per cent over the month.

ABS added, the Australian dollar fell from about $US1.0350 to be changing hands at $US1.0323 by early afternoon.

"The trade balance should quickly swing back into surplus once coal exports are restored," said Kieran Davies, head economist at Royal Bank of Scotland. Then again, Australia's recovery progress decelerates and remains long-drawn-out.

As Asian steel manufacturers and energy providers rush to assist the needs of the region's emerging economies, Australia's terms of trade are at 60-year highs with prices of coal and iron ore rolling up.

Coal and iron ore costs will continue to shoot up the economy in the coming years with China's and India's markets driving demand, economists predicted.

According to Phil O'Donaghoe, senior economist at Deutsche Bank, "It is not the first time this data has given us a surprise and it does not change the still very strong international demand for Australian resources."

Phil O'Donaghoe explained further, "The big fall in exports of non-monetary gold also contributed to the weak result in February. It was down 46 per cent over the month, but is often volatile month-to-month."

Winding down the coal production and costing the Australia billions of dollars, the Queensland floods were described as one of the most awful natural catastrophes in the country's history.

The floods and the effect on exports of Japan's earthquake and tsunami attack are expected to cause a nine-billion-dollar outlay to Australia's economy.

Source : ibtimes.com