Australia has recorded a seasonally adjusted trade deficit of $556 million in May, a $274 million increase on the revised deficit of $282 million in April.
Latest figures from the Australian Bureau of Statistics (ABS) reveal a slump in total exports and imports, led by a fall in metals and civil aircraft respectively.
Acting Minister for Trade Kim Carr says the data shows the impact of the global recession.
"This Government has been saying for a long time that Australia is weathering the global recession better than most - but we are not immune," Carr says.
He says the Government needs to increase its measures to cushion the economy and support Australian jobs.
"It underlines the importance of the government's commitment in the May Budget to invest $22 billion in infrastructure. This is supporting jobs now and helping to ensure the economy is ready to take advantage of any recovery."
According to the ABS, the total value of exports fell 5 percent in May.
"While it is disappointing to see the value of exports falling, it is an inevitable consequence of the rapid slowdown in the economies of our major trading partners and the large falls in commodity prices that have occurred," Carr says.
The value of coal exports fell by $540 million (15 percent) in May, as the large reductions in coal prices negotiated by Australian miners for the new Japanese financial year came into effect.
Exports of goods to Japan fell 13 percent, but exports to China continue to grow, up 9 percent.
Carr says there are further positives to be drawn from the report.
"The pleasing thing about today's figures is that volumes for our resource exports are holding up well. The volume of high-rank metallurgical coal exports rose 17 percent in May, while semi-soft coking coal rose 6 percent. The value of metal ore and minerals exports fell by 2 percent, a strong result given the large falls in contract prices for iron ore that have been announced recently," he says.
"I also welcome the continued growth in the value of our services exports, which rose 1 percent to a new high of $4.7 billion in May."
The value of manufacturing exports fell 3 per cent in May, with exports of transport equipment down $55 million (21 per cent) and metals exports falling $39 million (51 per cent).
Imports fell 4 per cent in May, with imports of capital goods falling $577 million (14 per cent), driven by a fall in the value of civil aircraft imports.
In seasonally adjusted terms, goods and services credits fell $1.112 billion (5 percent) to $20.392 billion.
Non-rural goods fell $684 million (5 percent), while other goods fell $368 million (24 percent) and rural goods fell $86 million (3 percent).