Sydney, May 4 (Bloomberg) -- Australia's trade surplus narrowed less thanexpected in March as exports of meat and grain surged, while imports ofconsumption goods rose. The nation exported A$257 million ($133 million) more than it imported in March,the Australian Bureau of Statistics said. That follows a revised A$402 millionsurplus in February and surpassed economists' expectations of A$140 million. Exports were bolstered by higher commodity prices and the weaker dollar. Thepick-up in imports, following three months of decline, suggests the domesticeconomy may be recovering after contracting in the fourth quarter. ``The overall trade picture is very encouraging,'' said Su- Lin Ong, senioreconomist at RBC DS Global Markets. ``Exports put in another goodperformance in the month. That's two consecutive gains in spite of weak globaldemand.'' The trade report showed exports rose 3 percent to A$12.97 billion from a monthearlier and imports rose 4 percent to A$12.71 billion. Though the surplus narrowed in March, it's still an improvement on the deficitsAustralia regularly posted early last year. In March 2000, the monthly shortfallwas A$835 million, its 28th straight month of deficit. The Australian dollar rose to 51.87 U.S. cents after the trade report from 51.78U.S. cents.
Currency Helps Exports
Helping underpin export values, the Australian dollar slumped 7 percent in March,raising returns from commodities sold in U.S. dollars. Australia earns 60 percentof its export income from commodities. It is the largest exporter of coal, iron ore,wool, beef and zinc. ``The Australian dollar is still super competitive, and that's definitely a key factorunderpinning exports,'' Ong said. Yesterday, BHP Ltd., Australia's No. 1 resources company, said fiscal third-quarter profit rose 50 percent on higher oil prices, a weaker local currency andrevenue from the acquisition last year of a local coal miner. The slump in the Australian dollar to a record low boosted profit by A$190 millioncompared with a year earlier, BHP said. ``Demand for oil, iron ore and coal has been strong so far in the fourth quarter offiscal 2001,'' Managing Director and Chief Executive Paul Anderson said in astatement. Showing the benefits of a weaker currency, even as global demand is slowing,the Reserve Bank's commodity price index in Australian dollar terms rose 5.4percent in March. ``The export sector is the strongest part of the Australian economy,'' said TimCrawford, senior economist at St.George Bank Ltd. Following the weakness in imports in previous months, and the rise in exports,overall the current account deficit in the first quarter should narrow to about 2.75percent of gross domestic product from 3.2 percent in the fourth quarter, saidMichael Blythe, an economist at Commonwealth Bank Australia. The current account deficit is the broadest measure of the flow of goods, servicesand investment into and out of a country. Overall, ``Australia's external account position is markedly better now than a yearago,'' Blythe said.