Trade deficit to balloon, report

Australia's trade deficit to balloon, according to Access Economics.

The next phase in the current financial crisis will see our trade deficit balloon, as the global recession impacts our major export customers’ demand, according to Access Economics analysts.

Access Economics’ recently released March 2009 Business Outlook found that Australia’s recession looks like being smaller than that in much of the developed world, which means our demand for imports is likely to fall less than their demand for our exports.

According to the report, output growth differentials among the nation’s States and Territories are narrowing as the bad news spreads.

“In brief, much of the rest of Australia is starting to look like NSW already looks, and NSW itself is mired in trouble,” the report said.

“The huge growth rates seen in the ‘Sunbelt States’ — Western Australia, Queensland and the Northern Territory — in recent years will have been almost pegged back to the national pack by 2009-10, while some of the poor performers of the recent past (such as NSW) will eventually benefit from the big swings seen in Australian interest and exchange rates in recent times.”

The report said that the worse Japan looks, the worse Queensland looks.

“Japan is looking pretty bad, which will increasingly weigh on the outlook for Queensland — usually a star growth State,” the report said.

“But it is not yet a done deal that the State will drop into technical recession in the coming year.”

Investment is central to the outlook for Western Australia, according to the report.

“Western Australia has just lived through one of the biggest investment booms it will ever see,” the report said.

“Past big downturns in resource-related construction have cost the State dearly, and wherever business investment goes in the next few years, WA’s economy will go too.”

To keep up to date with Australian Mining, subscribe to our free email newsletters delivered straight to your inbox. Click here.