Australian trade in figures

Gregory O’Brien, Statistics and Mapping

Key issue

Trade has been a key issue for the Australian Parliament ever since the Protectionist Party led by Edmund Barton in government faced an opposition led by the Free Trade Party in the first Federal Parliament. Trade continues to be central to the Australian economy and has grown as a proportion of national income in recent decades as transport, communications technologies and rising living standards in Asia have increased regional markets for Australian exports. However, recent trade tensions with China, Australia’s largest export market, and global trade disruptions brought on by the Russian invasion of Ukraine shows that the debate over trade policy is never settled and each new Parliament must contend with the latest trade issues.

The importance of trade to the Australian economy

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 the introduction of the National Accounts in 1959 and Australia’s trade balance over the period (the difference between Australian exports and imports in a quarter).

Figure 1          Australian trade as a proportion of GDP

Figure 1	Australian trade as a proportion of GDP

Source: Australian Bureau of Statistics (ABS), Australian National Accounts: National Income, Expenditure and Product (Canberra: ABS, Dec 2021).

Throughout the 1960s and 1970s, trade represented a reasonably steady proportion of gross domestic product (GDP), staying broadly within a 11–16% range. Since the early 1980s, trade steadily increased relative to GDP facilitated by economic deregulation and the globalisation of trade supply chains (p.3). Exports relative to GDP have continued to increase, while imports have been more heavily impacted by COVID-19 related disruptions. Since 2017 the divergence between exports and imports has created Australia’s largest trade surpluses relative to GDP during the National Accounts era.

While Australia is often thought of as a trading nation, these proportions are not particularly high by international standards. One reason for this is that, as an island nation, Australia’s lack of land borders reduces the amount of local or short-distance international trade. Trade represents a larger proportion of GDP for Australia than the large economies of the US, Japan, and China, and is on par with Indonesia and New Zealand (countries similarly without major land borders). However, major European economies, including the UK, and export-oriented economies including South Korea and Germany, show much higher levels of trade relative to GDP (see Figure 2).

Figure 2          International comparison of trade as a proportion of GDP, 2021

Figure 2	International comparison of trade as a proportion of GDP, 2021

Source: Oxford Economics, Global Macroeconomic Databank (subscription)

Figure 2 also shows Australia had a historically large trade surplus, at 5.7% of GDP in 2021. This was the highest reported amongst these countries, which includes the export-oriented economies of South Korea and Germany that historically report consistent trade surpluses. In contrast, the US and India reported large trade deficits.

It is important to note when comparing across countries that while international trade balances must balance globally (that is, total global exports must equal total global imports), for any single country trade surpluses or deficits can persist over many years or decades. For example, Australia persistently recorded trade deficits between the 1970s and 2017, as shown in Figure 1, with imports greater than exports. Since 2017 this long-term trend has reversed as demand for Australian exports grew while imports fell during the COVID-19 lockdowns. How long this persists will depend on the trajectory of commodity prices, which underpin the value of Australian exports.

The composition of Australian exports

While the importance of services exports such as tourism and education has increased over time, Australia remains primarily an exporter of resources, energy, and agricultural commodities. Figure 3 presents the value of Australian exports by major category over the last 25 years and the respective proportions of total Australian exports.

Figure 3          Australian exports by major category, financial years

Sources: Department of Industry, Science, Energy and Resources (DISER), Resources and Energy Quarterly, March 2022 (Canberra: DISER, 2022), Department of Agriculture, Water and the Environment (DAWE), Agricultural Commodities, March 2022 (Canberra: DAWE, 2022), ABS, International Trade in Goods and Services, Australia (Canberra: ABS, 2022).

As Figure 3 shows, Australian resource exports were valued at $229 billion in 2020–21, representing almost half of total Australian exports. This particularly high proportion was due to elevated resource prices compared with subdued energy prices.

Energy exports fell in 2020-21 to $81 billion from $116 billion in 2019-20, representing 18% of total Australian exports. However, coal and natural gas prices have risen dramatically in the 2021–22 financial year to date, which should increase the share of total exports represented by energy (and decrease the share represented by resources). Over the 4 years prior to 2020 - 21, energy exports were around a quarter of total Australian exports.

Agricultural exports averaged $49 billion a year over the past 5 financial years and remain an important source of Australian export revenue. While the value of agricultural exports has remained steady over this period, the proportion of total exports fell from 13% in 2016-17 to 11% in 2020-21 (as total exports grew faster than agricultural exports). Prices for many agricultural products, including wheat and barley, have notably strengthened so far in 2021–22.

Of all Australia’s exports, services have been most heavily impacted by COVID-19, particularly tourism. From 2018–19 to 2020–2021, total services exports reduced by more than a third, from $97 billion to $63 billion. Border restrictions severely limited the tourism industry with total travel exports falling from $59.7 billion in the year to March 2020 to $21 billion in the year to March 2022. Over this period, education-related travel fell from $38.8 billion to $20.4 billion, a fall of almost half, while other personal travel fell from $20.9 billion to just $686 million, a fall of over 96%.

The Department of Foreign Affairs and Trade (DFAT) publishes an annual list of Australia’s top 25 exports and imports as part of its suite of trade publications. As these are partly based on the (COVID-delayed) ABS International trade: supplementary information publications, the most recent data is from the 2019–20 financial year or 2020 calendar year.  

Iron ore remains Australia’s largest export, valued at $153 billion in 2020–21. Coal and natural gas are the next largest export commodities, with exports valued at $39 billion and $30 billion respectively in 2020–21. Other major export commodities include education-related travel services ($40billion in 2019-20 prior to COVID disruptions), gold ($26billion in 2020-21), beef ($8billion in 2020-21), aluminium ores ($8billion in 2020-21), copper ores ($7billion in 2020-21), crude petroleum ($7billion in 2020-21), and wheat ($6.8 billion in 2020-21).

Australia’s major export markets

Over the long-term Australia’s major export markets have shifted from Europe to East Asia. Figure 4 shows the proportion of total Australian exports to major markets over the past 30 years.

Figure 4          Australian exports of goods and services, share of total by country and country group

Figure 4	Australian exports of goods and services, share of total by country and country group

Source: DFAT, Direction of Goods and Services Trade, Financial Years (Canberra: DFAT)

Figure 4 shows some of the trends driving Australian export growth. The rise of China as a key export market is clear, with 36.7% of Australia’s exports being destined for China in 2020. Remarkably, the value of Australian exports to China grew from under $7 billion in 2000 to over $169 billion in 2020. The concentration of Australian export markets is also evident, with the top 4 markets (China, Japan, US and South Korea) accounting for almost 60% of all exports. While exports to Japan have fallen in relative terms it remains an important export market, receiving over 10% of Australian exports in 2020.

Recent trends in Australian trade with China

China is Australia’s largest trade partner, so recent tensions between Australia and China have led to trade sanctions on a range of Australian exports- and caused widespread concern amongst Australian exporters. These trade sanctions have been placed on major Australian exports including coal, barley, beef, wine, cotton, lobsters and timber.

While these trade sanctions have had a limited impact on Australia’s aggregate exports to China, since higher exports of iron ore offset the declines in other export categories (see Figure 5 below), they have led to significant disruption in the products targeted. This disruption has led to trade diversion in the products sanctioned by China, with many of the exports previously sent to China being redirected to existing or new export markets.

Figure 5          Australian total merchandise exports to China and the rest of the world (3-month rolling average)

Source: Source: DFAT, Trade Statistical Pivot Tables (Canberra: DFAT, 2022).

Figure 5 shows the 2 broad factors that mitigated the impact of China’s trade sanctions on overall Australian merchandise (goods) exports – increased iron ore exports offsetting falls in other export categories during the second half of 2020, and exports to the rest of the world offsetting falls in exports to China since July 2021 as iron ore exports started to fall back from the spike in the first half of 2021.

The left-hand panel of Figure 5 shows Australian merchandise exports to China broken down into iron ore exports and all other goods exports. The chart shows the importance of iron ore exports to China with over 75% of the total value of Australian goods exports to China coming from iron ore exports at the peak in mid-2021. The strength of iron ore exports to China between May 2020 and July 2021 meant that total Australian merchandise exports to China continued to grow despite the trade sanctions imposed by China. Iron ore exports to China have fallen since July 2021 as issues in China’s domestic construction industry and COVID-19 related lockdowns have slowed construction activity. However, Australian exports of other goods have recovered from their lows, leaving total exports to China at a similar level to that prior to the COVID-19 pandemic.

The right-hand panel of Figure 5 shows total Australian merchandise exports broken down by those to China and those to all other export markets. This clearly shows the strong increase in Australian exports to the rest of the world across 2021, which has driven an increase in Australian exports despite the fall in exports to China since the peak in July 2021.

Trade diversion for exports sanctioned by China

As noted above, trade diversion – diverting exports which would have been sold to China to other existing and new export markets – has helped somewhat to mitigate the impact of China’s trade sanctions on Australian exports of targeted goods. Figure 6 below shows the composition of exports by destination for 5 of the largest commodities subject to sanctions: alcoholic beverages (including wine), barley, beef, coal, and cotton.

Figure 6          Australian exports by destination, selected commodities

Source: DFAT, Trade Statistical Pivot Tables (Canberra: DFAT)

Alcoholic beverage exports are the category which has seen the least trade diversion, with exports for 2020–21 and over the first 9 months of 2021–22 showing steep falls compared with the 3 years prior to COVID19. Exports of alcoholic beverages to China, which had been worth over a billion dollars a year between 2017­–18 and 2019–20, halved in 2020–21, and have been very low over the first 3 quarters of 2021–22. While exports to the UK increased in 2020–21, sales to other major markets have not offset the fall in sales to China.

Barley has been much more successful in redirecting exports to new markets. The reopening of the Saudi Arabian market, and increased exports to other Middle Eastern markets, ASEAN countries, Japan, and Mexico, have helped Australian exports of barley rebound strongly since the lows of 2019–20. While the price paid by Chinese buyers was often at a premium to the global market price, meaning the barley industry has lost money because of the sanctions, the successful trade diversion program has seen exports over the first 3 quarters of 2021–22 already exceed full financial year exports for the 4 prior years.

Beef was subject to limited sanctions, and exports to China have not fallen to the degree seen in other commodities, but the growth in exports to China has reversed. Exports of beef were already quite diversified and exports to China have fallen in line with exports to other major markets.

Coal, the largest export industry to face Chinese sanctions, has primarily diverted exports to major existing customers such as Japan, India, Korea, and Taiwan. The rebound in the price of coal, particularly since the Russian invasion of Ukraine, has increased the total value of coal exports to levels seen prior to the pandemic.

Cotton was hit particularly hard by Chinese sanctions. Total Australian exports of cotton fell from over $2 billion in 2018–19 to under $500 million in 2020–21, with cotton exports to China falling from $1.6 billion to $200 million over the period. Over the first 3 quarters of 2021–22, the cotton industry has started to divert cotton shipments to new and existing markets with large increases in exports to Indonesia, Thailand, Bangladesh, and Pakistan. This trade diversion has helped recover some of the export revenue lost from reduced exports to China, but total exports are still well below the levels in 2017–18 and 2018–19.

Looking at the industries disrupted by the trade dispute with China shows that any government response will benefit from being tailored to the industry. Some industries with existing diverse export markets may be able to redirect exports to existing markets with limited government support, while other industries may require more extensive government assistance to open new markets, provide industry support to transition into other products, or promote increased domestic consumption.

Further reading

Australian Bureau of Statistics (ABS), International Trade in Goods and Services (Canberra: ABS, released monthly).

Department of Foreign Affairs and Trade (DFAT), Australia’s Trade in Goods and Services (Canberra: DFAT, released biannually).

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


Back to Parliamentary Library Briefing Book

For copyright reasons some linked items are only available to members of Parliament.

© Commonwealth of Australia

Creative Commons

With the exception of the Commonwealth Coat of Arms, and to the extent that copyright subsists in a third party, this publication, its logo and front page design are licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia licence.