Australia has rebounded from its worst ever trade deficit as resource exports recover from the devastation of the Queensland floods.
The nation's export performance is set to sizzle in coming months - with economists even predicting an eventual trade surplus - as Asian nations pay more for key commodities.
The trade deficit on goods and services fell by 16 per cent to a seasonally adjusted $2.736 billion in March, the Australian Bureau of Statistics said on Tuesday.
It was more than half a billion dollars below Australia's worst-ever trade deficit of $3.261 billion recorded in February.
Exports climbed by four per cent in March to $19.176 billion, while imports rose by one per cent to $21.912 billion.
Coal exports soared by 23 per cent to $1.827 billion, as flood-ravaged mining areas in central Queensland were able to resume production following heavy rainfall in February.
ANZ economist Riki Polygenis said the rebound in coal exports, following better weather, was the main driver of Australia's narrower trade deficit.
"Finally, some good news on Australia's beleaguered trade balance," Ms Polygenis said.
Metal ore and minerals exports rose by 16 per cent to $3.329 billion while rural exports, which include cereal and meat, climbed by 5.7 per cent to $2.258 billion.
Macquarie Group senior economist Brian Redican said renegotiated coal and ore prices, which came into effect in April, would narrow Australia's trade deficit in the June quarter.
UBS senior economist Adam Carr said rising global demand for commodities could eventually lead to a trade surplus.
"With domestic demand slowing, import growth will slow and given those bulk commodity price gains, we would be very surprised if exports value don't continue to grow at a strong clip," he said.
"Our trade deficit will narrow and eventually get some surpluses."
On the imports side, the biggest mover was a 17 per cent rise in demand for machinery and industrial equipment, which climbed to $1.589 billion.
Australia's premier trading partner Japan was the top export destination in the nine months to March, buying $24.036 billion in goods and services followed by China on $18.682 billion.
China was the number one source of imports, with Australia buying $23.3 billion from the world's most populous nation in the same period, ahead of the United States on $18.095 billion.
© 2008 AAP
