Robust Q4 Net Export Contribution Due To Weak Imports

Australia’s Q4 current account surplus was a lot wider than expected at $11.8bn, largest since Q2 2022, and Q3 was revised to a surplus of $1.3bn from -$0.2bn. The large shift was driven by strong commodity exports and a narrower net income deficit. The ABS expects the $3.9bn rise in net trade volumes to add 0.6pp to Q4 GDP growth, due to weak import volumes, which now skews risks to the upside for consensus’ 0.2% q/q forecast after inventories shifted them to the downside.

• Goods and services import volumes fell 3.4% q/q in line with soft domestic demand. Export volumes fell 0.3% q/q.
• The Q4 goods & services surplus widened over $8bn to $32.4 with goods rising around $6bn to $30.2bn and services over $2bn to a surplus of $2.2bn. Goods export values rose 3.1% q/q, after declining the previous 3 quarters, to still be down 8.7% y/y. The rebound was driven by increases in coal and metal ore export prices and volumes.
• Goods import values fell 1.8% q/q to be down 1.8% y/y with consumer goods falling 3.4% q/q and -2.8% y/y, due to vehicles, and capital goods -3.5% q/q but +3.3% y/y. Services imports fell 5.5% q/q, driven by less overseas travel, but are up 9.3% y/y due to strong growth through Q2 and Q3.
• The trade balance was helped by a 2.2% q/q increase in the terms of trade, which improved to -3.9% y/y from -9.1% in Q3. Goods & services export prices rose 3.1% q/q while import prices +0.8% q/q.
• The net income deficit narrowed $1.9bn to $20.2bn due to lower profits.

Source: MNI - Market News/ABS