Australia Net Exports To Add to Q2 GDP But Q1 Revised Down

--Current Accounts Deficit Widens in Q2

     SYDNEY (MNI)- From Balance of Payments data for the second quarter

published by the Australian Bureau of Statistics on Tuesday:

                                                 Q2                           Q1

--------------------------------------------------------------------------------

                                         In A$, Bln                   In A$, Bln

Current Acct Balance                           -9.6     -4.8 (revised from -3.1)

                               -7.9 (Range -12.0 to

MNI Median                                    -4.5)

Net Export Contribution to                             -0.7 pct points (revision

GDP                                 +0.3 pct points                         N/A)

MNI Median                  0.0(Range -0.4 to +0.2)

Terms of Trade                                -6.0%         +6.6% (revision N/A)

     FACTORS: The current-account deficit widened in Q2 due mainly to a

narrowing in the goods and services surplus owing to lower export commodity

prices. Exports of goods and services fell A$2.7 billion (-3%) and imports of

goods and services rose A$1.6 billion (+2%). The primary income deficit widened

by A$499 million. 

     In seasonally adjusted chain-volume terms, the deficit on goods and

services shrank from A$1.6 billion in Q1 to A$196 million in Q2 and so is

expected to add 0.3 percentage point to the Q2 volume measure of gross domestic

product. However, the narrowing in deficit was due to a sharp revision in Q1

balance from a surplus position of A$543 million to deficit of A$1.6 billion.

     Australia's terms of trade fell 6.0% in Q2 owing to an decrease of 5.4% in

the implicit price deflator for goods and services credits and an increase of

0.7% in the deflator for goods and services debits.

     Data on government finances showed total general government final

consumption expenditure increased A$946 million or 1.2% q/q.  Total general

government gross fixed capital formation increased by A$3.0 billion - up 19.7%

q/q. Total public corporations gross fixed capital formation fell by A$481

million - a decline of 8.1% q/q.

     TAKEAWAY: The net export contribution to Q2 GDP was better than MNI median

forecast for zero contribution. However, this was due to a sharp downward

revision in Q1 data which may lead to downward revision to the contribution of

net exports to Q1 GDP from the 0.7 subtraction originally reported. Economists

will finalize forecasts for Q2 GDP, which will be released Wednesday morning,

after this data and after taking into account government finance statistics.

     The current MNI survey median forecast for Q2 GDP is +0.8% q/q and +1.8%

y/y with downward bias. Even if there is no revision to the +0.8% q/q GDP

forecast, it is likely the +1.8% y/y projection will be revised downwards.

--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com

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