Imports rose by 1.0 per cent and exports climbed 4 per cent to produce the narrower-than-expected deficit in March. Analysts had expected a deficit of AD 2.9 billion. However, imports of household electrical items were 7 per cent lower while textiles, clothing and footwear imports eased 3 per cent in March from February.

The reason behind improvement in trade balance is an upward movement in coal, metal and mineral export. Coal export soared as flood ravaged areas in central Queensland were able to resume coal production following heavy rainfall. Wheat and rural export which include cereal and meat also helped the overall export to rise.

Increased demand of Australian products from Asian countries like Japan and china is one among the reasons for improvement in Australian trade balance. At the same time slowing domestic demand is resulting in a slowdown in import growth and hence improving the trade balance for the country.

UBS senior economist Adam Carr said rising global demand for commodities could eventually lead to a trade surplus. “With domestic demand slowing, import growth will slow and given those bulk commodity price gains, we would be very surprised if exports value dosen’t continues to grow at a strong clip,” he said, reports The West.

According to research analyst at Arth Business Research, “Improvement in coal and wheat production due to good rainfall and at the same time increasing demand from Asian countries is expected to improve the export level in the coming months of the year (2008). Also lowering domestic demand is expected to decrease the growth rate for imports which are expected improve the trade balance of the country for this year (2008).”