/www.bloomberg.com/ By Victoria Batchelor
Sydney, Jan. 10 (Bloomberg) -- Australia's trade deficit widened in November to its largest in more than two years as consumer goods imports rose and a drought reduced earnings from wheat, cotton and meat exports.
The shortfall widened to A$1.14 billion ($656 million) from a revised A$957 million in October, the Australian Bureau of Statistics said. The median forecast in a Bloomberg News survey of 16 economists was for a trade gap of A$1.29 billion.
The worst drought in a century and a faltering global economy are expected to slow Australia's growth rate to 3 percent this year from almost 4 percent in 2002, according to a Bloomberg News survey. Weaker global growth will prompt the central bank will leave interest rates unchanged in coming months, analysts say.
``We are going to have to get used to A$1 billion deficits for a while, and the weakness in exports will be a drag on the nation's growth,'' said Michael Blythe, chief economist at Commonwealth Bank of Australia. ``Clearly the drought and falling commodity prices in November helped boost the deficit.''
The central bank's Australian dollar commodity price index fell 1.4 percent in November as wheat, veal and beef prices declined.
The trade gap was the widest since August 2000 when it reached A$1.15 billion. Exports of goods and services were little changed in November from the previous month at A$12.67 billion. Rural goods exports, which include meat and crops, slumped 7 percent. Imports increased 1 percent to A$13.81 billion.
Summer Crop
November was the 12th straight monthly shortfall, highlighting the risk to the economy from the drought and faltering global economic growth. Economists surveyed by Bloomberg News expect the Reserve Bank of Australia to keep its benchmark overnight cash target rate unchanged at 4.75 percent until at least June.
Australia's production of summer crops will fall to a 20-year low, with cotton likely to tumble 65 percent, rice 71 percent and sorghum 53 percent in the year ending June 30, 2003, the Australian Bureau of Agricultural & Resource Economics said last month.
With the full effect of the drought yet to come, ``I'd be expecting some even bigger trade deficit figures in the first six months of 2003,'' said Ivan Colhoun, chief economist at Deutsche Bank AG in Sydney.
Bonds Little Changed
Today's report showed cereal exports dropped 16 percent and wheat exports slumped 21 percent. Meat exports fell 7 percent. These figures aren't seasonally adjusted.
Bonds were little changed after the report. The yield on the 6.5 percent bond maturing May 2013 was at 5.37 percent at 12:30 p.m., down from 5.41 percent just before the report was released.
Exports of services, which include spending by tourists, fell 2 percent. Non-rural goods exports, which include metals, increased 2 percent.
Imports of consumer goods rose 5 percent in November and capital goods imports declined 6 percent. Imports of intermediate goods, which includes machinery, rose 2 percent.
``It's partly a good news story because higher trade deficits reflect the fact that the domestic economy has been strong, and so we are importing more goods,'' Blythe said.