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Sydney, Sept. 30 (Bloomberg) -- Australia's trade deficit widened in August, the 10th straight monthly shortfall, as consumers and businesses spent more on imported clothes and fuel.
The trade deficit widened to A$948 million ($515 million) from a revised A$720 million in July, the Australian Bureau of Statistics said. The shortfall was expected to be A$900 million, according to the median forecast in a Bloomberg News survey of 20 economists.
The economy grew 3.8 percent in the second quarter from a year earlier, fueled by higher consumer spending which boosted demand for imported goods. Against that, a drought, weaker global demand and falling tourism is limiting export growth.
``Running the domestic economy at high speed through a sluggish global environment means that export growth will fail to keep pace with imports,'' said Michael Blythe, chief economist at Commonwealth Bank of Australia. ``Larger trade and current account deficits are the inevitable results.''
Imports in August rose 2 percent from July to A$13.66 billion, and exports increased 1 percent to A$12.72 billion, the bureau said.
The Australian dollar and bonds were little changed after the report. The dollar fell to 54.29 U.S. cents at 11:55 a.m., Sydney time, from 54.34 cents before the report was released. The yield on the May 2013 bond rose 1 basis point to 5.32 percent at 11:55 a.m. A basis point is 0.01 percentage points.
Interest Rates
The report comes a day before the Reserve Bank of Australia board meets to review interest rates. All 22 economists surveyed by Bloomberg News expect the central bank to leave its benchmark interest rate at 4.75 percent because of deteriorating global economic growth. The bank's decision is announced Wednesday.
``It is looking less likely there will be a rate rise before year end,'' said David de Garis, senior economist at Australia & New Zealand Banking Group Ltd. in Melbourne.
Exports of services, which include tourism spending, fell 1 percent. Exports of rural goods gained 5 percent. The figures are seasonally adjusted.
Imports of intermediate goods, which include machine parts and fuel, rose 11 percent. Consumer-goods imports rose 3 percent.
Australia has recorded 10 straight monthly trade deficits as a global economic slump damps demand for commodity exports, such as wool and beef.
Drought Concerns
``Import strength shows that domestic spending is still doing well,'' said Kieran Davies, chief economist at ABN Amro Australia Ltd. ``The risk is that you are going to start to see fairly soon the impact of the drought on rural exports. Those two factors should get you a further deterioration in the trade deficit in the months ahead.''
Last week, a government agency forecast a drought will slow Australia's economic growth by half a percentage point and cost the world's biggest beef and wool exporter A$3.8 billion in the year ending June 30, 2003.
Grain production will be almost halved, wool production is likely to slide 11 percent and cotton and sugar output will fall, the Australian Bureau of Agricultural and Resource Economics said.