SYDNEY: Australia’s current account slides into deficit in the September quarter as prices for some commodity exports fall and locals spend more money abroad, leaving trade as a drag on the economy overall.
Other data from the Australian Bureau of Statistics (ABS) yesterday showed government spending was surprisingly strong in the quarter, helping offset the drag.
Australia’s current account fell to a deficit of A$158mil (US$104.49mil) in the third quarter. That was down from a surplus of A$7.8bil in the second quarter and well under forecasts of an A$3.1bil surplus.
Exports were pulled down by falling prices for coal and liquefied natural gas, while imports of oil climbed and more Australians travelled abroad.
The ABS said net exports would subtract 0.6 percentage points from gross domestic product (GDP), compared with forecasts of 0.2 percentage points.
That was balanced in part by a 1% rise in government spending, which added 0.3 percentage points to GDP.
In addition, a sharp rise in mining inventories in the quarter looked to have contributed around 0.9 percentage points to growth, suggesting some upside risk to GDP.
Figures for third-quarter GDP are due today. Median forecasts had been for a subpar increase of 0.4%, which would see annual growth slow to 1.8%, its lowest rate since late 2020 when the pandemic had closed much of the economy.
The resilience of domestic demand is a major reason the Reserve Bank of Australia raised interest rates to a 12-year high of 4.35% in November, ending four months of steady policy.
The central bank was expected to stand pat in its last meeting of the year, awaiting more data on inflation and employment.
Markets are pricing in a tiny chance of another rise, but a 40% probability of a move by March.
In a telling barometer of consumption, industry data yesterday showed new vehicle sales surged in November and were almost 18% higher than a year earlier. Six of the past seven months have seen record sales, and 2023 as a whole is set for a record.
“This is an extraordinary result in what is now likely to be an extraordinary year,” said Tony Weber, head of the Federal Chamber of Automotive Industries.
“As the challenges of the past year’s supply chain disruptions recede, consumers have greater access to a broad range of choices.” — Reuters