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Australia's current account deficit widened to a record in the fourth quarter as imports increased and transport bottlenecks hampered exports of metal ores.
The trade shortfall on goods, services and investment expanded to A$19.35 billion ($22.4 billion) from a revised A$16.35 billion in the third quarter, the statistics
bureau said.
That was larger than the median estimate of an A$18 billion gap in a Bloomberg survey of 23 economists.
The report showed declining resources shipments curbed growth in the fourth quarter by more than analysts forecast. Inadequate port and railway infrastructure has hindered the ability of commodity producers to meet soaring Chinese demand.
The Australian dollar's 21 per cent gain the past year has reduced earnings on overseas sales.
"Exports continue to dwindle and the strong Australian dollar is making them less competitive," said Savanth Sebastian, an equities economist at Commonwealth Bank of Australia in Sydney. "A turnaround in exports doesn't look like it is going to happen any time soon."
Australia's exports of metal ores and minerals slumped 8 per cent in the fourth quarter, yesterday's report showed.
"Resource exports continue to be restricted, due largely to unresolved infrastructure bottlenecks and extreme weather," said Alex Joiner, an economist at Australia & New Zealand Banking Group in Melbourne. "Import growth has been solid, in line with strong domestic demand."
The statistics bureau said net exports subtracted 1 percentage point from economic growth in the fourth quarter. That was more than economists' forecasts of 0.6 per cent.
The net-exports figure measures the change in exports minus the change in imports in the quarter. The Government will publish its gross domestic product report tomorrow.
Economists had forecast economic growth to slow to 0.8 per cent in the final three months of 2007 from 1 per cent in the previous quarter, according to a Bloomberg News survey.
"The larger net exports drag" means "we are nudging our fourth-quarter GDP forecast to 0.6 per cent from 0.7 per cent", Westpac economists said.
Demand from China and other Asian nations for iron ore and coal mined in Australia is surging. At the same time, ships have been forced to queue at the nation's ports because of a lack of loading facilities.
Macarthur Coal, the world's biggest shipper of pulverised coal used to make steel, said profit slumped 68 per cent in the six months ended December 31 as port constraints curbed exports.
As well, Macarthur said record rainfall would cut output this quarter and may affect production in the next three months.
Australia's monthly trade deficit probably swelled to the second highest on record in January as floods and cyclones disrupted exports, a report to be released this week may show.
The shortfall expanded to A$2.55 billion, according to the median estimate in a survey of economists. The report is due for release on March 6.
Exporters have been hurt by the local currency's surge against the US dollar over the past year.
The goods and services trade deficit swelled to A$6.86 billion in the fourth quarter from A$4.79 billion. The net income deficit widened to A$12.4 billion from A$11.5 billion in the previous three months.
- BLOOMBERG
