The Northern Territory (NT) has recorded a trade surplus for over a decade mainly due to the high volume and value of exports related to energy and mineral products (Chart 1). Over the past 10 years, the NT has had an annual average trade surplus of $2.4 billion. In 2016-17, the NT’s net international trade balance decreased to a record low of $865 million, down from $2.1 billion in 2015-16. This large decrease was driven by a 3.9% decline in total exports, partly offset by a 26.1% increase in total imports, likely associated with imported materials for the construction of the Ichthys liquefied natural gas (LNG) project.
The NT’s trade balance mainly consists of goods, with services only contributing a minor proportion. In 2016-17, service imports contributed 14.4% to the total value of imports and service exports contributed 13.2% to the total value of exports.
For the latest available data and analysis, see the Department of Treasury and Finance’s Gross State Product Economic Brief.
In 2016-17, the NT’s total value of goods exported was $4.9 billion, in current prices. The major components of goods exports included confidential items (67.0%), metalliferous ores and metal scraps (15.6%) and live animal exports (8.6%). In general, confidential items for the NT include petroleum, LNG and mineral products. Data can be confidentialised if a supplier’s privacy is easily identified, for example the NT only has one exporter of Uranium. Recent changes in classification of confidential items have increased the proportion of NT data that is confidentialised.
In 2016-17, the NT had the third highest level of exports as a share of gross state product (GSP), in current prices. This is consistent with the other mining states of Western Australia and Queensland, which highlights the resource-intensive nature of the NT economy (Chart 2).
In 2017-18, the NT’s top exported goods included confidential items, metalliferous ores and metal scrap, live animal exports (food and live animals), petroleum and petroleum related products, and meat and meat preparation (food and live animals) (Chart 3).
The NT’s value of exported goods increased by 15.4% to $5.7 billion in 2017-18, compared to 2016-17. This was driven by increases in metalliferous ores and metal scrap (up 46.4%), and confidential items (up 13.3%). Confidential items (65.8%), and metalliferous ores and metal scrap (19.8%) accounted for the majority of total exports in 2017-18. Exports from the Ichthys LNG project are expected to commence in 2018, which will provide a boost to the NT’s total goods exports over the medium term.
In 2017-18, the NT’s top three goods export destinations were China (37.2%), Japan (32.4%) and Indonesia (5.9%). Exports to China increased by $373 million to $2.1 billion, with confidential items (58.4%), and metalliferous ores and metal scrap (41.1%) making up a large portion of the total. Exports to Japan also increased by $108 million to $1.8 billion in the year, while exports to Indonesia declined by $17 million to $332 million (Chart 4).
In the year to September 2018, the value of exported goods from the NT increased by 14.5% ($4.1 billion). This was predominantly driven by significant increases in exports to China (up $339 million) and Japan (up 290 million).
The main commodities exported over this period were confidential items (68.4%), metalliferous ores and metal scrap (17.3%), and live animal exports (7.7%).
In 2017-18, the NT’s value of imported goods increased by 17.5% to $2.0 billion. The NT’s top three source countries for imports were Singapore, Malaysia and Japan, with growth in imports from Singapore (up $217 million to $412 million), and Japan (up $43 million to $167 million). However, imports from Malaysia declined by $14 million to $289 million, predominantly affected by a decline in petroleum, and petroleum products (down 6.8%) (Chart 5).
In the year to August 2018, the NT’s imports increased by 21.2% to $1.9 billion compared to the same time last year. This was mainly due to a significant increase in imports to Singapore (up $276 million) in the year.
The main imported commodities over this period were petroleum, petroleum products and related materials (56.0%), transport equipment (11.3%), and road vehicles (10.6%).
For the latest available data and analysis on goods merchandise trade, see the Department of Treasury and Finance’s International trade economic brief.
In 2016-17 the international net trade balance for services increased significantly to $89 million, up from a nil net balance in 2015-16. This was driven by a 1.8% increase in international service exports and a 10.3% decrease in international service imports (Chart 6).
The major components of the NT’s international service exports include personal travel services (62.9%), government goods and services (16.3%), transport services (9.7%) and business travel services (9.3%). The demand for international service exports are likely to be driven by the depreciation in the Australian dollar and global business confidence of investment in the NT. As a result of the NT’s small population size and high mining activity, NT service exports contributes a small portion (15.4%) to the NT’s total exports.
The slight increase in the NT’s major international service exports in 2016-17 was driven by a 9.2% increase in personal travel services compared to 2015-16. Business travel services includes the provision of travel services for visitors arriving in the NT for business‑related purposes.
The major components of the NT’s international service imports include personal travel services (62.4%), freight services (12.3%) and passenger fares (11.3%). In 2016-17 the decrease in the NT’s international service imports was largely driven by a 57.1% decrease in freight services imports. International service imports are likely to be driven by an appreciation in the Australian dollar, making travel and overseas goods and services more affordable for domestic residents.
The latest International Monetary Fund (IMF) World Economic Outlook (WEO) publication for October 2018, reports that the global economy is projected to remain at its 2017 level of 3.7% in 2018-19, 0.2 percentage points lower for both years than forecast in the WEO publication for April 2018. The downward revision is attributed to:
Table 1 shows the GDP growth for the NT’s current major international trading destinations.
The NT is geographically located close to major Asian economies including China, Japan, Malaysia, Indonesia and Thailand and, as expected, these are the NT’s major trading partners. The NT also relies on goods imports from the United States of America and the European Union, which are also identified as key trading partners.
The following analysis is based on the NT’s key trading partners for exports and imports, which is updated on a biannual basis to reflect most recently available calendar year and financial year trade statistics. This reporting frequency is optimal given the relatively small size of the NT economy, as well as volatility in the monthly international trade statistics published by the ABS.
Movements in exchange rates are largely determined by the difference in inflation and interest rates as well as the trade balance between countries. In 2017-18, the Australian dollar depreciated by 3.9 per cent, compared to the US dollar (from 76.9 cents in June 2017 to 73.9 cents in June 2018), and was averaging 77.4 cents in the year (Chart 7).
In October 2018, the Australian dollar was trading at 70.85 cents to the US dollar, a 1.9% decline from 72.2 cents in the previous month (Table 2).
Since May 2013, the Australian dollar has been below parity, and steadily depreciating. The relatively weak Australian dollar could benefit the NT, making goods and service exports cheaper and more competitive in overseas markets.
The trade weighted index (TWI) is a measure of the Australian dollar against a basket of currencies and measures the strength of the Australian dollar against major trading partners (Chart 7). The importance of other currencies depends on the proportion of trade done with that country. TWI is an efficient measure of general trends in the exchange rate, because the Australian dollar could appreciate against the US dollar but depreciate against other currencies.
In 2017-18, the TWI was 4.4% lower than the previous financial year, averaging $64.40 in Australian dollar terms.
In October 2018, the TWI fell by 0.5 per cent from the previous month to $61.9.
Commodity prices are largely driven by global demand, especially from the Asian region. In 2017, global prices of steel-related commodities experienced increases due to high demand from China.
All prices referred to below are in Australian dollars.
In 2017-18, the price of iron ore declined by 2.8% to $88.00, and averaged $90.00 in the year (Chart 8). This was slightly lower than the 2016-17 average price of $92.40.
Based on the latest update for October 2018, iron ore prices increased by 9.3% to $103.61, but was 28.9% higher compared to the same time last year. This is still low compared to the prices observed during the mining boom.
Zinc and lead is one of the major exports from the NT and the value of total zinc and lead produced in 2016-17 was $650 million. For the latest data and analysis about the NT’s Mining and Manufacturing industry, see the Department of Treasury and Finance’s Mining and Manufacturing website and Department of Primary Industry and Resources (DPIR) website.
Zinc and lead prices increased in 2017-18, with zinc 22.3% higher compared to 2016-17 and averaging $4119.30. Lead was 12.2% higher and averaging $3154.0.
Zinc and lead prices increased in October 2018 with zinc up 11.9%, while lead was only slightly up by 0.2%. Prices also grew for both commodities in year on year terms, increasing by 9.5% for zinc and by 3.9% for lead (Chart 9).
The average price of gold increased by 0.6% to $1687.60 in 2017-18.
In October 2018, the price of gold increased by 3.4% to $1715.44. and was 3.8% higher compared to the previous year (Chart 10).
Global oil prices increased substantially in 2017-18, rising 22% to $97.38 and averaging $82.50 compared to the previous year (Chart 11).
The most recent World Bank report shows that oil prices are at their highest since September 2014 ($109.52) with average prices at $108.29 in October 2018, a 3.8% increase in the month and a 37.3% increase in the year to October 2018.
National and interstate economic activity influences the NT’s economy through changes to population, interstate trade, domestic tourism and the availability of workers to meet the NT’s labour requirements. Additionally, monetary policy set by the Reserve Bank of Australia (RBA) influences household consumption, business confidence and investment in the NT.
In 2016-17, the Australian economy grew by 2.0% to $1.7 trillion. Growth was largely driven by an increase in non-mining private investments. In 2016-17, the NT economy grew by 3.9%, a 2.0 percentage point increase from 2015-16. In other jurisdictions, percentage change of GSP was between a 2.7% decline in Western Australia and a 4.6% increase in the Australian Capital Territory (Chart 12).
The RBA has kept the official cash rate at a record low of 1.5% since August 2016. The NT could benefit from relatively low interest rates due to the impact on business confidence, consumption and investment decisions.
In 2017-18 Australia’s national trade balance totalled $6.9 billion, a 36.8% decline from the previous financial year. This was driven by a decline in trade of goods (down 5.7%) to $12.9 billion, offset by an increase in trade in services (up 115.5%) to $6.0 billion, in the year.
The Australian Bureau of Statistics (ABS) publishes data on the NT’s trade balance annually. This is in line with the GSP expenditure measure.
International Trade statistics are based on monthly data published by the ABS. This release provides preliminary estimates of Australia’s international goods and services on a balance of payments basis, and merchandise import and export statistics on an international merchandise trade basis.
International service exports represents income received by local businesses from overseas travellers, foreign businesses, foreign students and foreign government personnel (mostly defence), for services provided including meals, education, accommodation, entertainment and tourism activities. Service imports reflect expenditure by Territorians on services provided overseas. The ABS releases data for the NT’s services trade on an annual basis.
The IMF publishes a World Economic Outlook report biannually, which consists of an analyses by IMF staff economists on global economic developments over the near and medium term. An associated WEO database is released along with the WEO report, which presents the IMF staff’s analysis and forecasts of economic developments at the global level. The IMF also releases quarterly updates on global economic developments. These are not a full WEO report and do not include an update on the analysis and forecasts published in a full WEO report.
The World Bank releases data on commodity prices on a monthly basis.