THE value of Australia’s two-way trade in goods and services has been on the rise over the past two decades, with exports alone surging close to 15% year-on-year to $387bn last year, with imports growing 7% to $377bn in the same period, according to an analysis published by the Australian Trade and Investment Commission.
Austrade economist and head of benchmark research Edmund Tang wrote that after growing by 0.6% in 2016, Australia’s total two-way trade with the world increased by 11% year-on-year to $763bn the following year.
“Trade in 2017 was around 42% of Australia’s nominal GDP, up from 32% in 1990,” Mr Tang wrote in his recent Austrade report.
“Trade growth was underpinned by strong demand in the markets of greater China (China, Hong Kong and Taiwan) and other Asian economies (including the ASEAN region, Japan, South Korea and India) for our goods and services, which saw two-way trade rise by 15% and 21% to $217bn and $286bn respectively in 2017.
“Also boosting total trade growth last year was our two-way trade with American markets, which rose by 5% to $88bn.”
Some 71% of Australia’s two-way trade in 2017 was with its regional neighbours in the Asia Pacific; trade with the region saw a compound annual growth rate of 6.5% over the past 10 years, Mr Tang wrote.
“In dollar terms, our trade with the Asia Pacific region has jumped by $253bn over the past 10 years,” he wrote.
“Conversely, the combined European and American share of trade declined to 26% from 33% over the same period, though the value of our two-way trade with these two regions remained strong, up $45bn.”
The top trading partners
Australia’s top five trading partners in 2017 accounted for 53% of the value of trade in 2017, up from 44.8% a decade earlier.
In 2017, trade with China was valued at $183bn – up 16% on 2016 – and remains Australia’s largest trading partner, export market and import source, according to Mr Tang’s report.
Japan came in second, with trade valued at $72bn, which is an increase of 17% on 2016, with the US being Australia’s third-largest trading partner. Trade between Australia and the US in 2017 was valued at $68bn; the US is Australia’s largest two-way services trading partner.
The purchase of LNG platforms is credited with driving a 71% year-on-year uptick in trade in 2017 with South Korea. Total trade between Australia and the peninsular nation was valued at $55bn last year.
And, India’s two-way trade with Australia in 2017 was valued at $27bn, overtaking the UK and New Zealand as Australia’s fifth most valuable trading partner.
The top exports
Iron ore topped the list of Australia’s most valuable exports, increasing 17% last year (compared with 2016) to $63bn, accounting for 16.3% of Australia’s total exports of goods and services for the year.
Coal was the second-most valuable export over 2017, worth $57bn, up 35% on the previous year.
Education-related travel services was Australia’s third most valuable export in 2017, worth $30bn, with exports of natural gas coming in fourth last year, worth $26bn.
The top imports
Australia’s biggest import was personal travel services (excluding education), valued at $40bn in 2017 – 10.6% of Australia’s total imports (by value).
Passenger motor vehicles were the second-most valuable import for the year, worth $23bn, up 6.6%, and accounting for 6.1% of total imports.
Refined petroleum was third, worth $19bn, and “ships, boats and floating structures” were the fourth most valuable import, worth $19bn in 2017.
Sources: Australian Trade and Investment Commission, Department of Foreign Affairs and Trade and Australian Bureau of Statistics
This article appeared in the August edition of DCN Magazine