Australia's trade deficit narrowed in August, as bigger than expected drop in imports sagged outpaced a modest fall in exports.
The Australian balance of goods and services was a deficit of $1.524 billion in August, seasonally adjusted, from a revised wider deficit of $1.783 billion in July, official figures show.
Exports fell by 2 per cent in adjusted terms, while imports fell by 3 per cent, the Australian Bureau of Statistics.
"The size of the deficits in the first two months of the quarter imply that net exports is likely to again be a drag on GDP growth in the third quarter," ANZ economist Alex Joiner said in a statement.
The GDP expanded 0.6 per cent in the second quarter, allowing Australia to avoid a technical recession, after having eked out 0.3 per cent growth in the first three months of the year.
However, Mr Joiner predicted the trade deficit "will become entrenched over the next twelve months."
"Any recovery in resources prices, especially of bulk commodities seems some way off," he said.
"In addition, a strong Aussie dollar and only marginal improvements in what is still weak global demand - especially in advanced nations - will continue to weigh on the non-resource export sector."
The import of fuel and lubricants dropped 24 per cent, likely reflecting a fall in petrol prices and seasonal drops. Economists were expecting a deficit of $900 million in August.
Non-monetary gold imports rose by 118 per cent, partially offsetting the drops in other imports.
BusinessDay's Chris Zappone with AAP
