Australians are missing out on the benefits of rising exports

The sharp fall in the terms of trade has offset much of the recent gains in export volumes.

Net exports -- which accounted for around half of real GDP growth over the past year -- continued to climb in the December quarter and are set to contribute solidly to growth when the national accounts are released. Nevertheless, the ongoing deterioration in the terms of trade -- only partly offset by the weaker dollar -- ensures that Australians aren’t seeing the true benefits of the export upswing.

On a monthly basis, Australia’s trade deficit more than halved to $436 million in December -- its lowest level since March. That completes a quarter where the bottom line has improved and should contribute to growth.

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