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Since 2000-01 volumes of Imports have grown more strongly, up 91.8%, compared to 15.0% growth in volume of Exports. The slower growth in Exports was mainly driven by weak growth in rural goods exported. Over the past seven years, rural goods exported decreased by 20.0%. The decreases were largely driven by a fall in exports of cereal grains and cereal preparations, down 42.4%.
While in volume terms Imports have been growing faster than Exports, the prices received for Exports have been growing faster than the prices paid for Imports. The Terms of trade represents the relationship between the prices of exports and imports. An increase (decrease) in the Terms of trade reflects Export prices increasing (decreasing) at a faster rate than Import prices.
The strong growth in Terms of trade over the past seven years reflected over 30.7% growth in Export prices and a fall in Import prices of 13.9%. See Prices for more details on Export and Import prices. In 2007-08, the Terms of trade increased by 5.3%, the lowest increase in the past five years.
Net exports represent the difference between Exports and Imports. Net exports detract from GDP growth when the change in the volume of Imports has been greater than the change in the volume of Exports. Since 2000-01 Net exports have detracted around 8.0% from GDP growth, in most part from increasing Imports.
Since 2000-01 when the contribution of Net exports to GDP growth was 1.8%, the contribution of Net exports has been slowly trending downwards, reaching -1.9% in 2007-08.
In addition to the trade in goods and services, the flow of funds between Australia and overseas is an important component of the relationship with the rest of the world. Australia has generally been a net borrower of funds from overseas. In the national accounts, this situation is reflected by a negative value for net lending to non-residents. The only exception to this pattern was in 1972-73. The ratio of net borrowing from overseas to GDP in 2007-08 was 6.0%, up slightly from 5.4% in 2006-07.
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