Australia's trade deficit is getting bigger.
Australia's monthly trade deficit has blown out to nearly $2.7 billion, the second worst performance on record and well above economists' forecasts of $2.4 billion.The figures from the Australian Bureau of Statistics for the month of November showed an increase of $287 million from an upwardly revised October shortfall.
The final deficit for the month was $2.66 billion, a figure which has only been exceeded by the $2.76 billion shortfall registered in April 2003.
The value of imports is up 2 per cent to a record $15.5 billion.
When Paul Keating was treasurer, figures like these would have sent the dollar into a downward spiral. To protect the currency, interest rates would have been raised.
Now the markets just shrug, and it's business as usual.
How long can it be till the markets react and the government (or the Reserve Bank) is forced to reign in the economy?
It won't take much tightening to cause severe pain to many over indebted home owners.
I've often wondered if the current economic good times were built on anything more substantial than cheap credit, a housing boom and an artificial tariff barrier caused by a weak dollar. Now the dollar is stronger, exporting is more difficult, and imports are cheaper. Hence we spend more than we earn.
Howard's battlers would do well to reduce their debt quickly down to manageable levels.
