REPEAT:MNI ANALYSIS: Australia GDP Fcast Likely Stay At +0.7%

Repeats Story Initially Transmitted at 02:08 GMT Sep 4/22:08 EST Sep 3

--Current Account Deficit Widened On Higher Primary Income Deficit

--Net Export To Add 0.1 Percentage Point To Q2 GDP

By Sophia Rodrigues

     SYDNEY (MNI) - Australia's net export contribution to second quarter GDP

was in line with expectation and this together with public demand data suggest

little prospect for change in forecast for Q2 GDP which current stands for 0.7%

q/q and 2.8% y/y growth.

     The Q2 GDP data is due Wednesday.

     Australia's current account deficit widened in the second quarter due

mainly to a rise in net primary income deficit and a decrease in the goods and

services surplus. 

     Data published by the Australian Bureau of Statistics Tuesday showed the

current account deficit widened to A$13.5 billion in Q2 compared with MNI median

forecast for a deficit of A$11.7 billion. In Q1 the deficit was A$11.7 billion.

     The data also showed net export will contribute 0.1 percentage point to Q2

GDP which is in line with MNI median forecast.

     The net primary income deficit rose A$1.1 billion in Q2 to A$15.9 billion.

The main reason for the higher deficit was increase in direct investment

liabilities, income on equity and investment fund shares which rose A$715

million.

     The balance on goods and services was A$2.8 billion in Q2 compared with

A$3.3 billion in Q1. In seasonally adjusted chain volume terms, the balance on

goods and services deficit fell in Q2, and is expected to contribute 0.1

percentage point to Q2 GDP growth, assuming to significant revision to Q1 GDP.

     ABS also published government finance statistics for Q2 that showed the

government sector adding 0.2 points to Q2 GDP, the same as Q1.

     General government final consumption expenditure rose A$859 million in Q2,

up 1.0% q/q and is expected to add 0.2 points to Q2 GDP. Total public gross

fixed capital formation decreased by A$7 million in Q2 and is not expected to

contribute to Q2 growth.

     In Q2, government taxation revenue saw a sharp jump, rising 11.5% q/q to

A$146.1 billion. In y/y terms it was up 8.5%.

     Terms of trade fell 1.3% in Q2, following a 3.3% rise in Q1. The fall was

due to an increase of 1.4% in the implicit price deflator (IPD) for goods and

services credits, and an increase of 2.7% in the PID for goods and services

debits. 

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