SYDNEY: The value of Australian exports plunged in the second quarter by the most in almost 25 years as coal prices tumbled 36.8 per cent and the nation's currency rose.
The export price index slumped 20.6 per cent from the first quarter, the biggest decline since the index began in1974, the Bureau of Statistics said yesterday. Imports fell a record 6.4 per cent. Economists forecast declines of 6 per cent and 16 per cent for import prices and export prices respectively.
Lower prices for exports threaten to erode Australia's economy, which was one of the few including China and India to expand in the first quarter.
Australia's terms of trade, a measure of income from exports, tumbled 15 per cent in the second quarter, said Helen Kevans, an economist at JPMorgan Chase.
"The terms of trade will fall at least 30 per cent from peak to trough, draining national income, although it now appears the squeeze will be worse than we currently forecast," Kevans said.
Australia's trade deficit widened in May as a drop in coal shipments pushed exports to the lowest level in 14 months, a report showed on July 2.
The nation's economy avoided a recession in the first quarter as government stimulus and interest-rate cuts stoked consumer spending. The economy expanded 0.4 per cent from the fourth quarter, when it shrank 0.6 per cent.
Yesterday's report "provides a reminder that Australia has yet to feel the full brunt of the global recession", said Su-Lin Ong, senior economist at RBC Capital Markets.
"Monetary and fiscal stimulus are helping to temper the downturn, but the hole in national income cannot be fully plugged."
