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Q3 Trade To Weigh On GDP As Current Account In Deficit

AUSTRALIA DATA

The Q3 current account posted a deficit of $0.2bn compared to a surplus of $3.2bn that was forecast. This sharp narrowing from the $7.8bn surplus in Q2 was driven by the impact of lower commodity prices on the trade balance. The terms of trade deteriorated 2.6%. The net export share of GDP was also worse than expected at -0.6% after +0.8% in Q2.

  • The trade balance narrowed $8bn to $22.8bn with both goods and services narrowing. Exports fell 2.1% q/q and -4.8% y/y and imports rose 3.3% and +0.1%, due to higher fuel prices and capex goods. Goods exports fell 3.1% q/q to be down 11% y/y due to key mining goods (especially coal) but services rose 2.7% q/q and 41.7% y/y as overseas student numbers reached a new record high.
  • The ABS reports that prices of goods exports fell 1.9% q/q and -13.3% y/y, the fifth straight quarterly drop, due to coal and agricultural products.
  • A slightly narrowed primary income deficit also contributed to the shift in the current account. Lower dividends from ASX listed mining companies weighed on the total.
Australia current account A$bn

Source: MNI - Market News/ABS

Australia terms of trade

Source: MNI - Market News/ABS

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