Gregory O’Brien,Statistics and Mapping
Key Issue
Trade has been a key issue since the first Federal Parliament saw the Protectionist Party in government faced with an opposition with a strong contingent of Free Traders. Trade continues to be central to the Australian economy and has grown as a proportion of national income in recent years as transport, communications technologies and rising living standards in Asia have increased regional markets for Australian exports.
This article provides a brief overview of the importance of trade to the Australian economy, key export markets forAustralian goods and services, and the main exports produced by Australia.
Trade as a share of GDP
One way of visualising the importance of trade tothe Australian economy over time is by looking at the proportion of Gross DomesticProduct (GDP) represented by trade. Figure 1 shows exports and imports on aBalance of Payments basis since 1959 and Australia’s trade balance over theperiod (the difference between Australian exports and imports in a quarter).
It shows that despite some volatility, traderepresented a reasonably steady proportion of GDP throughout the 1960s and1970s, increasing as a share of GDP since the 1980s and peaking in 2008 ataround 23 per cent. The last few years have seen a slight easing-off to averagearound 21 per cent of GDP. This means that around a fifth of all goods andservices (by value) produced in Australia are traded internationally.
While Australia is often thought of as a tradingnation, this proportion is low by international standards as our lack of landborders reduces the amount of local international trade compared with othercountries. Figure 2 shows exports, imports and trade balances as a proportionof GDP for a selection of G20 members. Trade is a larger proportion of GDP forAustralia than the large economies of the United States and Japan, but is lowerthan most other countries, particularly European countries and export-focusedeconomies such as Germany and South Korea.
Figure 2 also shows the relative trade balances ofthese countries. In 2014, Australia had a trade deficit of 1.4 per cent of GDP,much less than the US and Japan which both ran trade deficits over 3 per cent.It also contrasts with trade surplus countries such as Germany, which had a 6.7per cent surplus and South Korea, which had a 5.4 per cent surplus.
It is important to note while looking atcross-country comparisons that while trade balances must offset each otherglobally, for any single country, trade balances can persist over many years ordecades. For example, Australia has persistently run trade deficits over thelong-term, as shown in Figure 1. This can occur as tradeimbalances can be offset by contrasting balances in international incometransfers, or financial or capital account transactions within the Balance ofPayments.
Figure 1: Australian exports, imports and tradebalance as a proportion of GDP
Source: Australian Bureau of Statistics (ABS),Australian national accounts, cat. no. 5206.0, ABS, Canberra, March2016.
Figure 2: Exports, imports and trade balanceas a proportion of GDP in select G20 economies
Source: OECD, Trade in goods andservices (indicator), 29 July 2016.
Table 1: Australia’s top export markets
| Rank | Country | 2000 | 2007 | 2015 | 2015 | 5 year growth trend |
|---|---|---|---|---|---|---|
| A$m | A$m | A$m | % share of total | % | ||
| 1 | China | 6 868 | 27 659 | 91 297 | 28.8 | 8.1 |
| 2 | Japan | 25 342 | 34 715 | 42 355 | 13.4 | –1.5 |
| 3 | United States | 16 725 | 15 609 | 22 114 | 7.0 | 8.4 |
| 4 | South Korea | 9 869 | 15 418 | 20 014 | 6.3 | –2.7 |
| 5 | India | 2 298 | 11 265 | 13 574 | 4.3 | –9.3 |
| 6 | New Zealand | 9 254 | 12 891 | 12 577 | 4.0 | 2.7 |
| 7 | Singapore | 7 954 | 7 308 | 11 044 | 3.5 | 7.3 |
| 8 | United Kingdom | 7 609 | 11 812 | 8 815 | 2.8 | –7.8 |
| 9 | Malaysia | 3 261 | 4 464 | 7 966 | 2.5 | 9.1 |
| 10 | Taiwan | 6 022 | 6 446 | 7 479 | 2.4 | –4.3 |
| 11 | Indonesia | 3 928 | 4 751 | 6 804 | 2.1 | 3.6 |
| 12 | Hong Kong (SAR of China) | 4 731 | 4 361 | 5 591 | 1.8 | 3.0 |
| 13 | Thailand | 2 496 | 5 206 | 5 331 | 1.7 | –5.2 |
| 14 | Vietnam | 622 | 1 764 | 4 696 | 1.5 | 14.0 |
| 15 | United Arab Emirates | 1 165 | 3 548 | 4 020 | 1.3 | 9.4 |
| Total goods & services exports | 145 086 | 218 004 | 316 590 | 100.0 | 2.1 |
Source: Department of Foreign Affairs andTrade (DFAT), Australia’s trade in goods and services 2015, DFAT,Canberra, March 2016.
Table 2: Australia’s top 15 export products
| Rank | Commodity | 2013 | 2014 | 2015 | 2015 | 5 year growth trend |
|---|---|---|---|---|---|---|
| A$m | A$m | A$m | % share of total | % | ||
| 1 | Iron ores & concentrates | 69 492 | 66 008 | 49 060 | 15.5 | 0.9 |
| 2 | Coal | 39 805 | 37 999 | 37 031 | 11.7 | –3.9 |
| 3 | Education-related travel services | 15 010 | 17 037 | 18 801 | 5.9 | 3.3 |
| 4 | Natural gas | 14 602 | 17 743 | 16 456 | 5.2 | 13.0 |
| 5 | Personal travel (excl. education) services | 13 171 | 14 187 | 15 943 | 5.0 | 6.2 |
| 6 | Gold | 13 898 | 13 460 | 14 500 | 4.6 | –1.2 |
| 7 | Beef, f.c.f. (fresh, chilled or frozen) | 5 695 | 7 751 | 9 296 | 2.9 | 16.9 |
| 8 | Aluminium ores & conc. (incl. alumina) | 5 904 | 6 336 | 7 493 | 2.4 | 6.8 |
| 9 | Crude petroleum | 9 016 | 10 564 | 6 036 | 1.9 | –8.8 |
| 10 | Wheat | 6 085 | 5 920 | 5 814 | 1.8 | 4.4 |
| 11 | Professional services | 4 600 | 4 840 | 5 190 | 1.6 | 10.8 |
| 12 | Copper ores & concentrates | 5 192 | 5 359 | 4 825 | 1.5 | –0.8 |
| 13 | Other ores & concentrates (a) | 4 486 | 4 594 | 4 436 | 1.4 | 0.1 |
| 14 | Business travel | 4 200 | 4 203 | 4 407 | 1.4 | 5.6 |
| 15 | Aluminium | 3 675 | 3 968 | 3 934 | 1.2 | –3.0 |
| Total goods and services exports | 302 276 | 331 241 | 318 737 | 4.2 |
Note: (a) Other ores & concentratesconsists mainly of Lead, Zinc and Manganese ores & concentrates.
Source: DFAT, Australia’s trade in goodsand services 2015, DFAT, Canberra, March 2016.
Australia’s top export markets
TheDepartment of Foreign Affairs and Trade publishes a range of statisticsdescribing Australia’s trade figures. Australia’s Trade in Goods and Services,released every six months, provides a good overview of Australia’s top exportmarkets and export sectors.
Table 1 shows Australia’s topexport markets for 2015, the share of Australia’s total exports which went toeach market (by value) and growth in exports over the five years to 2015.Figures for 2000 and 2007 are included to show longer-term relative growthtrends.
This table shows some of the trendsdriving Australian export growth. The rise of China as a key export market isclear, demonstrated by 28.8 per cent of Australia’s exports being destined forChina, and the remarkable growth since 2000 in Australian exports to thismarket from under $7 billion in 2000 to over $90 billion in 2015. Theconcentration of Australian export markets is also evident with the top fourmarkets (China, Japan, US and South Korea) accounting for over half (55 percent) of all exports.
Southeast Asia has seen some of the strongest growth trends in thelast five years with exports to Singapore, Malaysia, Indonesia and Vietnam allshowing strong growth.
The inclusion of the United ArabEmirates is indicative of the strong growth in exports to the Middle East inrecent years.
The Department of Foreign Affairsand Trade produces individualfact sheets for most countries and regions to which Australia exports.
Australia’s top export products
As with Australia’sexport markets, Australia’s top export products are more concentrated thanimports.
Table 2 shows the top 15 export productsfor 2015 with relative shares of total exports and growth rates for the fiveyears to 2015.
Despite the fall in iron oreprices and the correspondent drop in export revenue, iron ore remainsAustralia’s largest export, followed by coal. These two commodities alonerepresent over a quarter of all export earnings. Primary products stillrepresent the majority of Australia’s top exports, with beef and wheat thelargest agricultural sources of export earnings, and oil and gas, gold andother metals representing the other top goods exports.
Services have become anincreasingly important component of Australia’s export revenue, witheducation-related, personal and business travel, and professional services allin the top 15 export categories. The growth rates of the services categoriesshow that strong growth in these areas over the past five years has helpedoffset lower growth rates in some resource sectors.
Further reading
Australian Bureau of Statistics (ABS), International trade in goods and services, cat. no. 5368.0, ABS, Canberra, released monthly.
Department of Foreign Affairs and Trade (DFAT), Australia’s trade in goods and services, DFAT, Canberra, released biannually.
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