Australia’s trade surplus swells to record as export prices soar

Australia’s trade windfall increased to a new high as prices and volumes of commodities like iron ore surged, boosting the economy as it headed into the late-March coronavirus lockdown.

The surplus spiked to a record A$10.6 billion ($6.8 billion) in March, exceeding economists’ estimates of A$6 billion and up from a downwardly revised A$3.9 billion in February, Australian Bureau of Statistics data showed Thursday. Overseas shipments advanced 15%, the most since September 2000.

“China’s reopening after the February lock-down provided a boost to the trade in goods, exports (+21.6%) and imports (+1.3%),” said Andrew Hanlan, a senior economist at Westpac Banking Corp. “Key to this was the rebound in iron ore production and export shipments post Cyclone Damien. The lift in the iron ore price in Australian dollar terms was also a plus.”

Hanlan said in a research note that services trade plunged because of the reduction in international travel.

The result is a welcome surprise for an economy shedding jobs and awaiting the economic hit from the coronavirus. Australia has kept shipping commodities to China throughout March and April, which will prevent a complete collapse; still, the central bank estimates that the economy will contract 10% in the first half.