Goods imports are driving the trend of imports accounting for a larger share of domestic demand in Australia than at any time since the quarterly national accounts began in the September quarter of 1959, according to a Monday report by ANZ.
Imports as a share of domestic demand rose to 24.2% in the March quarter from around 15% in the March quarter of 2000.
Goods imports rose to 17.7% from 11% over the same period. This surge in imports reflects a stronger demand for imported capital equipment, particularly automated data processing equipment, and consumer goods.
Australia recorded a monthly goods trade deficit of AU$3 billion in May, the largest goods trade deficit since 2015. Nominal goods imports rose to AU$46.6 billion in the month, the highest level since the monthly goods trade series began in July 1971.
Export values softened from a peak in 2022, as supply disruptions caused by the Russia-Ukraine conflict eased and commodity prices normalized.
On a real basis, Australia's goods trade balance has narrowed in recent years. Imports reached AU$123 billion in the March quarter, the highest level in the history of the national accounts data. The goods trade balance was at AU$15.5 billion in the quarter, its lowest level since the December quarter of 2012.
The trade balance is likely to become more sensitive to swings in domestic demand. Increased imports are expected to exert downward pressure on the trade balance as support from elevated commodity prices fades.