Australia posts trade deficit as disasters hit exports

Australia has posted a shock trade deficit for the month of February as twin natural disasters dented the country’s exports.

According to the latest data, the trade deficit stood at A$205m ($212m; £131m), the first deficit in 11 months.

Analysts were expecting a trade surplus of close to A$950m.

The Australian states of Queensland and Victoria were hit by floods and a cyclone in January and February.

The states are home to some of Australia’s most resource rich areas. As a result there has been a sharp fall in shipments of metals and minerals, with exports in the sector down by 8%.

Overall Australia’s exports slid 2% in February to A$22.8bn.

Meanwhile, imports rose by 5% to A$23bn. The surge in imports was mainly due to a 26% jump in fuels and lubricants.

Despite the surprising trade deficit, the overall outlook for Australia’s exporters remains upbeat.

Increasing demand from emerging economies coupled with rising commodity prices mean that profits at some of Australia’s biggest commodity exporters will continue to be robust.

Reserve Bank of Australia’s index of Commodity Prices has surged more than 55% in the first three months of the year.

It now stands 41% higher than in March of last year. Analysts say the affect of this can be already seen.

“The outlook for trade remains very strong, with high commodity prices underpinning miners’ plans for huge investment spending,” said Brian Redican of Macquarie.

Last week BHP Billiton said it will invest $9.5bn to expand its iron ore and coal operations in Australia. The company has planned an $80bn expansion over the next five years.

Analysts expect Australian companies to invest as much as A$160bn to expand their operations in the country this year.