SYDNEY: Australia’s current account deficit narrowed in the first quarter (1Q) driven by changes in financial flows, while net exports proved to be a small drag on growth, painting a somewhat sombre picture for the economy at the start of the year.
Other data also showed government spending, which has been driving economic growth, would drag a little on growth, although inventories surprised on the upside, adding a bit to gross domestic product (GDP).
The current account ran a deficit of A$14.7bil or about US$9.51bil in the first quarter, against a revised shortfall of A$16.3bil the previous quarter, Australian Bureau of Statistics (ABS) data showed yesterday.
That was driven mostly by financial flows, with net exports subtracting 0.1 percentage point from GDP in the first quarter, the ABS said. Analysts had expected a flat contribution.
Combined with the weakness in business investment, most of the data suggests some downside risks for the Australian economy.
Analysts are tipping the economy would grow just 0.4% in the first quarter, slowing from the 0.6% gain previously.
Annual growth was seen picking up to 1.5%, from 1.3%.
“Today’s data together with recent soft data on retail sales and capital expenditure, mean today’s 1Q GDP release is likely to show that activity was subdued in the first quarter,” said Ben Udy, lead economist for Oxford Economics Australia.
“Data on inventories suggests they may have been a rare bright spot in the 1Q activity data.” — Reuters
