Current Event: Trade Surplus Falls

Trade surplus falls but still bodes well for economic growth

Australia saw an unexpected monthly drop in exports, with imports remaining steady.  Actual exports fell 2% from expected value, corresponding to a 42% drop in trade surplus.  This change was largely caused by drops in prices of common goods, making it less profitable to export.


GDP = C + G + I + (Ex - Im)

Since exports fell, and imports stayed the same, monthly GDP fell as well.  However, Australia only recently has a trade surplus at all, so the GDP is still growing compared to previous years.

Since international prices of goods exported by Australia fell, demand for goods from Australia fell.  This made Australian exporters less likely to export goods.  Australia recently signed free trade agreements, which reduces the cost of international transactions.  This makes it more profitable to export, even if prices dip slightly.