It’s a bit shocking that until the last year or so, Australia managed to run a trade deficit during a resource boom. The tables below from the Department of Foreign Affairs and Trade show that from May 2004 to June 2008 — a period during which the All Ordinaries went up 98%, from 3,401 to a high of 6,760 — Australia recorded a trade deficit in 51 consecutive months. We even wrote about a longer streak of 75 consecutive months of trade deficits at the time.
The streak was broken in 2008 — mostly thanks to falling imports during the panicked early days of the GFC (which has now arrived in Australia with monster truck force). Then, by June 2010, rising iron ore and coal prices started to deliver a string of twenty-out-of-twenty-one months of actual trade surpluses. This was the very peak of the boom — where the price blowout in iron ore and coal delivered a rare period of trade surpluses.
The question now is whether Australia is any better off macro economically than it was before the boom. Are you better off than you were eight years ago? That’s an interesting question. Send us your answer to firstname.lastname@example.org. We’ll publish the results early next week.
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From the Archives…
The Pin-Up Stock of the Iron Ore Boom
31-08-2012 – Greg Canavan
How Australia Grew Fat and Lazy Off the China Boom
30-08-2012 – Greg Canavan
Why You’ll Never Change Our Mind About Inflation
29-08-2012 – Nick Hubble
The Make Believe World of Economists, Continued…
28-08-2012 – Bill Bonner
Iron Ore, a Love Story
27-08-2012 – Dan Denning