Australian trade surplus December 2016– Is it likely to prevent Australia technical recession

Australian Dollar (AUD) surged due to the trade surplus (reported by Australian Bureau of Statistics at $1.243 billion) and the weak US Dollar (USD) also contributed to a strengthening of the AUD as Federal Reserves of US maintains its status quo on the interest rates. Now the point of discussion is a ‘technical’ recession in Australia which lurks on Australian economy due to shrinking GDP of the country.

Opinions, facts sheets, and calculations from experts are not supporting this trade surplus as a big boost to the Australian economy. A number of experts and surveys point at slow demise of this hullabaloo of trade surplus. Here are two strong points:  Autotrader,commodity,cta,dma,foreign exchange,forex,forex rates,forex trade,forex trading,ib,leverage,metatrader 4,penny stocks,spread,stock,stock market,stp,trading

China-based surplus likely to slow down: The export boom of Australia has a great dependency on China (approx to 32%) and here is the problem. Due to the political and economic turmoil China is predicted to be facing can cut short this export. Recent development shows that real estate in China is plunging along with market liquidity. At the same time, its trade relation with the United States is also going to face some challenges as newly elected president of America, Trump, is likely to add 45% tax on the imports from China. This could lead to a shortage of funding. All these factors collectively can decrease the imports from Australia.

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 Export growth measured by volume not value: Australia is projecting a value based growth in the export at 12% in the quarter 4 of 2016. However, Export growth contribution is measured by volume of trade, not the value. Official data show that the volume of export increased only by 0.6%. If the volume growth does not improve in next two-quarters, there could be some tough situations for Australia.

We can wait for some time to see the actual scenario. Now let us have a look at what some of the experts are saying. The positive outlook is found in Shane Oliver of AMP Capital who is saying “While the GDP contraction in the September quarter will no doubt invite talk of a recession (defined as two consecutive quarters of falling GDP) growth is likely to bounce back in the December quarter avoiding a recession so there is no reason to get too gloomy.” futures market, gold futures, hot stocks, investing in stocks,metatrader,mt4,mt5,natural gas futures, oil futures, online broker, online trading, options trading, stock trade, stock broker, stock charts, stock market quotes, stock ticker  

 On the other hand, we cannot deny what Citi's Joshua Williamson noted: "Current high commodities prices will filter through to households by less than the previous price boom precisely because there isn't the investment and labour market boom in construction and downstream services now."  

We can conclude with a positive note that AUD is gaining after was influenced downward by the aftermath of Donald Trump’s shock election back in November. Will the trade surplus be able to back the entire Australian economy alone to avoid a technical recession which is supposed to be triggered by plunging GDP? Time has the answer…