Australia’s trade in figures

Gregory O’Brien, Statistics and Mapping

Key Issue
Trade has been a key issue since the first Federal Parliament saw the Protectionist Party in government faced with an opposition with a strong contingent of Free Traders. Trade continues to be central to the Australian economy and has grown as a proportion of national income in recent years as transport, communications technologies and rising living standards in Asia have increased regional markets for Australian exports.

This article provides a brief overview of the importance of trade to the Australian economy, key export markets for Australian goods and services, and the main exports produced by Australia.

Trade as a share of GDP

One way of visualising the importance of trade to the Australian economy over time is by looking at the proportion of Gross Domestic Product (GDP) represented by trade. Figure 1 shows exports and imports on a Balance of Payments basis since 1959 and Australia’s trade balance over the period (the difference between Australian exports and imports in a quarter).

It shows that despite some volatility, trade represented a reasonably steady proportion of GDP throughout the 1960s and 1970s, increasing as a share of GDP since the 1980s and peaking in 2008 at around 23 per cent. The last few years have seen a slight easing-off to average around 21 per cent of GDP. This means that around a fifth of all goods and services (by value) produced in Australia are traded internationally.

While Australia is often thought of as a trading nation, this proportion is low by international standards as our lack of land borders reduces the amount of local international trade compared with other countries. Figure 2 shows exports, imports and trade balances as a proportion of GDP for a selection of G20 members. Trade is a larger proportion of GDP for Australia than the large economies of the United States and Japan, but is lower than most other countries, particularly European countries and export-focused economies such as Germany and South Korea.

Figure 2 also shows the relative trade balances of these countries. In 2014, Australia had a trade deficit of 1.4 per cent of GDP, much less than the US and Japan which both ran trade deficits over 3 per cent. It also contrasts with trade surplus countries such as Germany, which had a 6.7 per cent surplus and South Korea, which had a 5.4 per cent surplus.

It is important to note while looking at cross-country comparisons that while trade balances must offset each other globally, for any single country, trade balances can persist over many years or decades. For example, Australia has persistently run trade deficits over the long-term, as shown in Figure 1. This can occur as trade imbalances can be offset by contrasting balances in international income transfers, or financial or capital account transactions within the Balance of Payments.

Figure 1: Australian exports, imports and trade balance as a proportion of GDP

Australian exports, imports and trade balance as a proportion of GDP

Source: Australian Bureau of Statistics (ABS), Australian national accounts, cat. no. 5206.0, ABS, Canberra, March 2016.

Figure 2: Exports, imports and trade balance as a proportion of GDP in select G20 economies

Exports, imports and trade balance as a proportion of GDP in select G20 economies

Source: OECD, Trade in goods and services (indicator), 29 July 2016.

Table 1: Australia’s top export markets

Rank Country 2000 2007 2015 2015 5 year growth trend
    A$m A$m A$m % share of total %
1 China 6 868 27 659 91 297 28.8 8.1
2 Japan 25 342 34 715 42 355 13.4 –1.5
3 United States 16 725 15 609 22 114 7.0 8.4
4 South Korea 9 869 15 418 20 014 6.3 –2.7
5 India 2 298 11 265 13 574 4.3 –9.3
6 New Zealand 9 254 12 891 12 577 4.0 2.7
7 Singapore 7 954 7 308 11 044 3.5 7.3
8 United Kingdom 7 609 11 812 8 815 2.8 –7.8
9 Malaysia 3 261 4 464 7 966 2.5 9.1
10 Taiwan 6 022 6 446 7 479 2.4 –4.3
11 Indonesia 3 928 4 751 6 804 2.1 3.6
12 Hong Kong (SAR of China) 4 731 4 361 5 591 1.8 3.0
13 Thailand 2 496 5 206 5 331 1.7 –5.2
14 Vietnam 622 1 764 4 696 1.5 14.0
15 United Arab Emirates 1 165 3 548 4 020 1.3 9.4
  Total goods & services exports 145 086 218 004 316 590 100.0 2.1

Source: Department of Foreign Affairs and Trade (DFAT), Australia’s trade in goods and services 2015, DFAT, Canberra, March 2016.

Table 2: Australia’s top 15 export products

Rank Commodity 2013 2014 2015 2015 5 year growth trend
    A$m A$m A$m % share of total %
1 Iron ores & concentrates 69 492 66 008 49 060 15.5 0.9
2 Coal 39 805 37 999 37 031 11.7 –3.9
3 Education-related travel services 15 010 17 037 18 801 5.9 3.3
4 Natural gas 14 602 17 743 16 456 5.2 13.0
5 Personal travel (excl. education) services 13 171 14 187 15 943 5.0 6.2
6 Gold 13 898 13 460 14 500 4.6 –1.2
7 Beef, f.c.f. (fresh, chilled or frozen) 5 695 7 751 9 296 2.9 16.9
8 Aluminium ores & conc. (incl. alumina) 5 904 6 336 7 493 2.4 6.8
9 Crude petroleum 9 016 10 564 6 036 1.9 –8.8
10 Wheat 6 085 5 920 5 814 1.8 4.4
11 Professional services 4 600 4 840 5 190 1.6 10.8
12 Copper ores & concentrates 5 192 5 359 4 825 1.5 –0.8
13 Other ores & concentrates (a) 4 486 4 594 4 436 1.4 0.1
14 Business travel 4 200 4 203 4 407 1.4 5.6
15 Aluminium 3 675 3 968 3 934 1.2 –3.0
Total goods and services exports 302 276 331 241 318 737 4.2

Note: (a) Other ores & concentrates consists mainly of Lead, Zinc and Manganese ores & concentrates.

Source: DFAT, Australia’s trade in goods and services 2015, DFAT, Canberra, March 2016.

Australia’s top export markets

The Department of Foreign Affairs and Trade publishes a range of statistics describing Australia’s trade figures. Australia’s Trade in Goods and Services, released every six months, provides a good overview of Australia’s top export markets and export sectors.

Table 1 shows Australia’s top export markets for 2015, the share of Australia’s total exports which went to each market (by value) and growth in exports over the five years to 2015. Figures for 2000 and 2007 are included to show longer-term relative growth trends.

This table shows some of the trends driving Australian export growth. The rise of China as a key export market is clear, demonstrated by 28.8 per cent of Australia’s exports being destined for China, and the remarkable growth since 2000 in Australian exports to this market from under $7 billion in 2000 to over $90 billion in 2015. The concentration of Australian export markets is also evident with the top four markets (China, Japan, US and South Korea) accounting for over half (55 per cent) of all exports.

Southeast Asia has seen some of the strongest growth trends in the last five years with exports to Singapore, Malaysia, Indonesia and Vietnam all showing strong growth.

The inclusion of the United Arab Emirates is indicative of the strong growth in exports to the Middle East in recent years.

The Department of Foreign Affairs and Trade produces individual fact sheets for most countries and regions to which Australia exports.

Australia’s top export products

As with Australia’s export markets, Australia’s top export products are more concentrated than imports.

Table 2 shows the top 15 export products for 2015 with relative shares of total exports and growth rates for the five years to 2015.

Despite the fall in iron ore prices and the correspondent drop in export revenue, iron ore remains Australia’s largest export, followed by coal. These two commodities alone represent over a quarter of all export earnings. Primary products still represent the majority of Australia’s top exports, with beef and wheat the largest agricultural sources of export earnings, and oil and gas, gold and other metals representing the other top goods exports.

Services have become an increasingly important component of Australia’s export revenue, with education-related, personal and business travel, and professional services all in the top 15 export categories. The growth rates of the services categories show that strong growth in these areas over the past five years has helped offset lower growth rates in some resource sectors.

Further reading

Australian Bureau of Statistics (ABS), International trade in goods and services, cat. no. 5368.0, ABS, Canberra, released monthly.

Department of Foreign Affairs and Trade (DFAT), Australia’s trade in goods and services, DFAT, Canberra, released biannually.

 

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