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Australia's trade deficit widens

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AAP

2012-12-07

Lower commodity prices and the high value of the Australian dollar have seen Australia post its biggest trade deficit since 2008.

The trade deficit widened to $2.088 billion in October seasonally adjusted, due to flat exports and a three per cent rise in imports, the Australian Bureau of Statistics said.

Commsec economist Savanth Sebastian said the figure was the tenth consecutive monthly trade deficit and showed the impact of lower commodity prices and the high Australian dollar.

"Lower commodity prices are the key driver and also you are continuing to see imports out-pace exports, so the strength of the Aussie dollar is also a big driver."

He said the latest figures would add to the case for further interest rate cuts in 2013.

The Reserve Bank of Australia cut the cash rate to three per cent at its December board meeting on Tuesday.

"It justifies the rate cut we had on Tuesday and if anything means the RBA can afford to allow the household sector a little more room to swing their arms over the coming year," Mr Sebastian said.