Total merchandise imports and exports

IBISWorld forecasts the total value of merchandise trade to push up by 0.1% in 2025-26, to reach $953.1 billion. Growth in imports as increased consumer demand and economic expansion push up demand for imported goods has been the primary driver of this uptick. Australia's exports heavily rely on the energy and resources sectors, including commodities like coal, natural gas and iron ore. As the prices of key commodities like natural gas and coal are projected to decline, export values will follow suit, weighing on the total value of merchandise trade. However, the shift towards a looser monetary policy globally is forecast to support commodity demand and help offset the decline in total merchandise exports.

Over the past five years, the total value of merchandise trade has exhibited strong growth thanks to several key trends. The volume and value of resource and commodity exports like iron ore, lithium, wheat and LNG have contributed significantly to export growth over the period. Supply chain disruptions from the Russia-Ukraine conflict propelled demand for Australian mining and agricultural exports. This supply shock also boosted commodity prices, further lifting Australia's export values over the past few years. As a result, many domestic producers have capitalised on the high commodity prices and ramped up production to meet rising consumer demand, causing the value of merchandise trade exports to peak in 2022-23. However, as supply disruptions eased, many commodity prices start normalised, leading to a downturn in exports over the three years through 2025-26.

The gradual deterioration of most manufacturing industries, driven by the rising competitiveness of foreign-produced goods and Australia's globally high wages, has meant that a more significant proportion of domestic consumption has been satisfied by imported products. One prevalent factor driving up import values is the closure of major Australian oil refineries like BP's Kwinana refinery in Western Australia and ExxonMobil's refinery in Victoria. In 2021, these refineries were shut down and converted into import terminals that import refined fuel, constraining domestic refinery production from over 22,770 million litres in 2020-21 to just over 15,750 in 2021-22. The constrained domestic capacity propelled imported fuel over the past few years, driving up the share of imports from major refined petroleum exporters, including Singapore and South Korea. Overall, IBISWorld forecasts the total value of merchandise trade to swell at a compound annual rate of 6.3% over the five years through the end of 2025-26.