February 7, 2014

In the final two months of 2013, Australia's trade balance returned to surplus brought about by a strong rise in mining and agriculture exports.

Australia's trade surplus was US$468 million in December, following a surplus of US$83 million in November, the first two surpluses since December 2011. The November figure was revised from a deficit of US$118 million. During December, exports rose 4% and imports were up 2%.

Agricultural exports were one of the major export contributors, with much higher volumes of wheat and grain providing a significant boost.

JP Morgan economist Tom Kennedy expects the rise in imports to be short lived as the winding back in mining investment boom means there will be fewer imports of mining machinery.

"Import values should stabilise as resource investment falls, pulling back on demand for capital goods, and as the drift lower in the currency generates more import substitution," he said.

Senior National Australia Bank economist Spiros Papadopoulos also said the result showed signs of strong domestic activity.

"We've had a gain in consumption imports and also capital imports, just again indicating that the domestic demand component seems to be running OK after an adequate level of consumer and business demand in the month of December," he said.

Papadopoulos said most of the economic growth in 2014 is going to come from the exports sector.