The Northern Territory (NT) has recorded a trade surplus for over a decade, mainly a result of the high volume and value of exports related to energy and mineral products (Chart 1). In 2017-18, the NT’s net international trade balance increased by 68.8% to $2.6 billion, up from $1.5 billion in 2016-17. This was slightly below the 10-year average of $3.0 billion.
The 2017-18 increase in net exports was mainly driven by an 80.3% increase in net goods merchandise, with an 8.2% increase in goods exports and an 18.9% decline in goods imports. Net services declined by 111.0%, driven by a 7.9% decline in service exports and a 6.1% increase in service imports.
The NT’s trade balance mainly consists of goods, with services only contributing a minor proportion of NT trade activity. In 2017-18, service imports contributed 18.8% to the total value of imports and service exports contributed 11.0% 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 2017-18, 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).
The NT’s top exported goods included confidential items (likely LNG and uranium), 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 65.5% to $9.5 billion in 2018-19, driven by increases in confidential items (up 99.0%). Confidential items (79.7%), and, metalliferous ores and metal scrap (10.8%) accounted for the majority of total exports over the year.
Data can be confidentialised by the source 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 confidentialised NT data.
In 2018-19, the NT’s total value of goods exported increased by 65.5% (up $3.8 billion) to $9.5 billion, in current prices. This was predominantly driven by significant increases in exports to Japan, China and Taiwan.
The top three goods export destinations were Japan (44.6%), China (27.4%) and Taiwan (5.9%). Goods exported to those destinations primarily consisted of confidential items (87.9%), metalliferous ores and metal scrap (10.7%) and petroleum, petroleum products and related materials (0.6%).
Exports to Japan increased by $2.4 billion to $4.2 billion, with the majority of the goods being confidential items (96.5%). Exports to China increased by $450 million to $2.6 billion in the year, with confidential items (71.4%), and metalliferous ores and metal scrap (27.0 %) making up a large portion of the total. Exports to Taiwan also increased by $554 million to $559 million, with confidential items (99.5%) and metalliferous ores and metal scrap (0.2%) making up the majority of trade (Chart 4).
In 2018-19, the NT’s value of imported goods decreased by 6.7% to $1.8 billion.
The NT’s top three source countries for imports were Singapore, Switzerland and Malaysia, with growth in imports from Singapore (up $260 million to $665 million), and Switzerland (up $122 million to $250 million). However, imports from Malaysia declined by $88 million to $202 million, predominantly affected by a decline in petroleum and related products (down 29.4%).
Goods imported from these source markets mainly consisted of petroleum and related products (75.7%) and transport equipment (21.8%) (Chart 5).
For the latest available data and analysis on goods merchandise trade, see the Department of Treasury and Finance’s International trade economic brief.
In 2017-18 the international net trade balance for services decreased to $30 million. This was driven by a 2.6% increase in international service exports and a 9.1% increase in international service imports (Chart 6).
The major components of the NT’s international service exports include personal travel services (62.5%) and government goods and services (17.5). 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 (12.8%) to the NT’s total exports.
The major components of the NT’s international service imports include personal travel services (67.8%), freight services (11.7%), and passenger transport services (which includes agency fees and commission for air transport) (10.1%). The annual increase in service imports was a result of a 33.3% increase in freight services in 2017-18.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) July 2019 publication reports global growth remains subdued, forecasted at 3.2 per cent for the remainder of 2019 before rising back up to 3.5 per cent in 2020, a 0.1 percentage point decline from the April 2019 projections for both years.
This revision reflects increasing global tension and perceived weakness in global economies with factors such as:
Table 1 shows the GDP growth projections for some of the NT’s current major international trading destinations.
The Territory is geographically located close to major Asian economies including China, Japan, Malaysia, Indonesia and Thailand and, as expected, these are the Territory’s major trading partners. The Territory 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 Territory’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 Territory 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 2018-19, the Australian dollar depreciated by 7.5 per cent, compared to the US dollar, and averaged 71.5 cents in the year (Chart 7).
In July 2019, the Australian dollar was trading at 68.94 cents to the US dollar, a 1.7% decrease from 70.13 cents in the previous month (Table 2).
Since May 2013, the Australian dollar has been below parity, and steadily depreciating with a few minor bumps in the exchange rate. 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 2018-19, the TWI was 4.5% lower than the previous financial year, averaging $61.40 in Australian dollar terms. In July 2019, the TWI was $59.50, decreasing from the previous month at $60.10.
Commodity prices are largely driven by global demand, especially from the Asian region. All prices referred to below are in Australian dollar terms.
In 2018-19, the price of iron ore increased by 76.5% in annual terms to $155.34, and averaged $113.28 in the year (Chart 8). This was significantly higher than the 2017-18 average of $90.01.
Based on the latest update for July 2019, iron ore prices increased by 12.3% to $174.41 in the month, and increased by 34% in year on year terms.
Zinc and lead is one of the major exports from the NT. For the latest data and analysis about the NT’s Mining and Manufacturing industry, see the Department of Treasury and Finance’sMining and Manufacturing website and Department of Primary Industry and Resources (DPIR) website.
Zinc and lead prices both decreased in 2018-19, with zinc being 9.7% lower compared to the previous year and averaging $3,718.48, and lead being 11.6% lower and averaging $2,788.11.
In July 2019, zinc prices went down 4.3%, but lead prices went up 5.8%. However, prices decreased for both commodities in year on year terms, decreasing by 9.8% for zinc and by 11.9% for lead (Chart 9).
In 2018-19, gold prices trended upwards to $1937.89 in June 2019, which was above the annual average of $1,768.07. In July 2019, the price of gold increased by 5.8% to $2,049.45, and increased by 6.7% compared in year on year terms (Chart 10).
Global oil prices increased in 2018-19 by 11.4% to average $91.89 compared to the previous year (Chart 11).
The April 2019 World Bank report shows that oil prices have recouped some of the losses experienced in December 2018 as a result of subsequent production cuts by OPEC and its partners. In July 2019, the monthly average price of oil increased by 4.6% to $89.17, and is up 10.5% in year on year terms.
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 RBA influences household consumption, business confidence and investment in the NT.
The RBA has maintained the official cash rate at a record low of 1.0% in its most recent monetary policy meeting. The NT could benefit from relatively low interest rates due to the impact on business confidence, consumption and investment decisions.
In 2018-19, Australia’s national trade balance totaled $49.9 billion, a 559.4% increase from the previous financial year. This was driven by an increase in trade of goods (up 317.1%) to $53.6 billion and a 29.5% increase in trade in services but still resulting to a deficit of $3.7 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 gross state product 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 travelers, 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 a biannual basis, based on the most current financial year and calendar year results.
The IMF publishes a World Economic Outlook report biannually, which consists of an analyses by IMF staff economists on global economic developments during 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.