By James Glynn
SYDNEY--Australia's trade balance recovered to record a healthy surplus in January on the back of a bounce in exports, fanning expectations of stronger GDP growth in the opening months of the year.
Australia posted a seasonally-adjusted trade surplus of A$1.055 billion in January, the Australian Bureau of Statistics said Thursday.
The outcome significantly beat economists' forecasts for a surplus of A$160 million, and represented a big turnaround from the December deficit of A$1.146 billion.
Value of exports rose 4% in January, while imports fell by 2%, the ABS said. The jump in exports was one of the strongest since 2016 when exports of iron ore were ramping up quickly and coal prices were soaring.
Economists said the combination of strengthening global growth and increase in exports of liquefied natural gas meant the outlook for Australia's trade balance was upbeat.
Weak exports on account of bad weather had dragged down GDP growth in the final three months of 2017, slicing 0.4 percentage points from activity, and sapping economic momentum.
"The quick return to trade surplus following a one-off deficit in December represents a positive start to the March quarter," said Andrew Hanlan, senior economist at Westpac.
Still, Australian exporters are watching developments in the U.S. as it mulls steep tariffs on steel imports.
Some analysts have warned the proposed move could have direct impact on Australia, a major exporter of iron ore and metallurgical coal, key steel making ingredients.
Australia's central bank Gov. Philip Lowe Wednesday warned about the risk to world growth from a trade war.
"If it's just confined to the current higher tariffs on steel and aluminum, then I think it's manageable for the world economy," Lowe said.
"This could turn very badly, though, if it escalates. If we see retaliation and a counter-retaliation, this could turn into a very big shock for the global economy," he added.
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