Australia’s Unbalanced Boom

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.

Australia's Trade Balance May 2004 to May 2008
Source: Department of Foreign Affairs and Trade

Australia's Trade Balance June 2008 to June 2012

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 We’ll publish the results early next week.


Dan Denning
for Markets and Money

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

Dan Denning
Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.

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3 Comments on "Australia’s Unbalanced Boom"

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truth and integrity

Over ten years communications, gas, electricity, water, council rates, land taxes have risen 7.1% to 11.6% pa (200% to 300%) (all government charges)
while CPI has risen 3.1% pa on average and wages increased 3% pa. (35%)
We are approximately half as well off today as ten years ago!
A Dick Tracy wrist ear/eye communicator does not cut it.

This is an ‘after the event’ story, if ever. Five years or more ago Blind Freddie could see that Australia had been positioned as “One Trick Pony”, yet none of the bells were ringing then. At least not among the soothsayers. Now we have wise men speaking about our “Dutch Disease” and other stuff after the damage has been done. Basically we have been living off asset sales – Once ever stuff buried in the ground – and to boot, 83% of that action has escaped our hands – It being in the hands of foreign masters, shareholders, etc. The… Read more »
Stuart Edwards

8 years ago I could afford to buy a house on a quarter acre block, bills were paid without making much of a dent in my wages – my electricity bill was less than $100.
Today I could probably afford to buy a house if I was prepared to buy a place on a 280 square metre block and pay half a million bucks and have no money for anything else once I have paid my $400 electricity bill.
My guess is most folk are not better off than they were 8 years ago..

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