Australia’s export performance in 2016

16 Jun 2017

Tags

  • Mark Thirlwell
  • Australian Economy
  • International Trade

After a fairly lengthy hiatus (apologies, lots of travel plus some time off) I thought I’d mark my return to our blog by taking a look at what the latest set of annual trade data tell us about Australia’s export performance last year. My colleague, Edmund Tang, has already posted on the headline numbers regarding total two-way trade in 2016, so here I’ll focus in a bit more detail on the export side of the story.

The first thing to note is that, after having declined in 2015, overall export values increased by almost five per cent in dollar terms in 2016, rising by A$14.7 billion to hit A$330.3 billion.

Australia: Exports of goods and services, 2000 to 2016

Back in 2015, the total value of exports had been pulled down by a fall in the value of goods exports in general, and a sharp drop in the value of exports of minerals and fuels in particular. Last year, this story went into reverse, with strong growth in mineral and (especially) fuel exports working to push up our overall export performance. Exports of gold and of services also made strong, positive contributions to the aggregate outcome.

Composition of Australian exports, 2016 and Change in value of exports by sector, 2016

The bounce back in key commodity prices seen over the course of last year obviously played a large role in driving that overall expansion in export values.

Monthly commodity prices

Exports of minerals and fuels have accounted for more than 40 per cent of Australian exports by value since 2008, and after seeing their share decline over the past two years as falling prices outpaced increased volumes, the 2016 recovery in commodity prices saw a return to a share of more than 43 per cent.

Also worth noting in the context of shifts in our export structure is the continued rise in services in total exports: after falling to a low of about 16 per cent of total exports in 2011, the share of share had climbed back to 21.6 per cent by the end of 2016.

Australian exports by selected sector, 1990-2016

Viewed in volume terms, Australian exports have now outpaced global trade growth for the past five years: our export volumes were up almost eight per cent in 2016, compared to world trade growth running at closer to two per cent. Again, a significant part of that is a minerals and fuels story: greater export volumes are the product of capacity-expanding investment conducted during the mining boom. But volume growth also reflects three consecutive years of strong growth in services export volumes.

Australia

Digging into the details a bit further shows that, by product, Australia’s largest exports in dollar terms last year continued to be iron ore (comprising more than 16 per cent of exports by value) and coal (almost 13 per cent), followed by education-related travel services (approaching seven per cent). All top three exports repeated their 2015 ranking. Gold and natural gas swapped places in 2016 relative to 2015, however, with gold moving into fourth place.

Top ten exports of goods and services 2016 and Australia

Across the top ten exports, the largest increases in dollar terms were experienced by exports of coal and iron ore, followed by gold, education-related travel and personal travel services, with gold showing particularly rapid growth in percentage terms. Meanwhile, exports of beef, wheat, aluminium and professional services all declined in value last year.

Change in value of top ten exports, 2016 (A$ billions and Per cent)

By market, China remained Australia’s top export destination in 2016, comfortably holding on to the number one spot as the largest destination for our exports of goods and for our exports of services. Indeed, the rebound in the value of iron ore and coal exports to China mean that the decline in the share of exports going to the market that we’d seen in 2014 and in 2015 has now been partially reversed, although we are still below the peak share reached in 2013.

Australia

The rankings of our top four export markets were unchanged in 2016 from 2015, although the UK did swap places with India for fifth spot. That latter change reflected a dramatic surge (of more than 70 per cent) in the value of Australian exports to the UK – an outcome dominated by gold exports – which also drove an increase in exports to the EU as a whole. In absolute (dollar) terms, China still saw the strongest growth in exports, however, reflecting significant increases in the value of exports of iron ore and coal as noted above, as well as strong growth in service exports. In contrast, the value of Australian exports to Japan (reflecting a drop in LNG export values), the United States (which saw a sizeable fall in the value of beef exports) and ASEAN (petroleum and gold export values both down) all fell.

Change in value of top ten export markets, 2016 (A$ billions and Per cent change)

Finally, by region, East Asia continued to account for well over half of all of our export sales – about 64 per cent in 2016. As the chart below shows, however, most of the growth in exports to the region over the past decade has been driven by growth in the share of our exports going to China: Japan’s share has been sliding over the same period while the share of exports to ASEAN and to other Northeast Asian markets has been relatively stable across the last ten years.

Direction of Australian exports, 2016 and Australian exports to East Asia, 1988-2016