Australia’s National Accounts $5 Billion in the Red

The Treasury building in Canberra, Australia, on Feb. 8, 2024. (Melanie Sun/The Epoch Times)

Australia’s current account balance unexpectedly swung into deficit in the March quarter as imports surged and commodity export prices fell. The rapid turnaround will reduce the country’s gross domestic product (GDP).

Data from the Australian Bureau of Statistics (ABS) showed the current account in deficit by $4.9 billion ($3.27 billion) in the first quarter of he calendar year, well under forecasts of a $5.1 billion surplus.

The previous quarter’s surplus was also revised down sharply to $2.7 billion.

The ABS said net exports would subtract 0.9 percentage points from GDP in the period, when analysts were predicting 0.6 percentage points.

A current account deficit shows that a country imports more goods, services, and income from abroad than it exports overseas. A trade deficit—when a country spends more money on imports than it makes on exports—is normally the largest component of an account deficit.

Australia had a current account deficit for 44 years, from September 1975 to September 2019. However, in recent years it had climbed into surplus.

Australia's current account balance, 1960 - 2024. (Source: Australian Bureau of Statistics)

The balance on goods and services fell $6.1 billion to $17.8 billion, and the net primary income deficit rose $1.5 billion to $22.3 billion.

A steeper fall in import prices (down 2.0 percent) relative to the fall in export prices (down 1.8 percent) meant Australia’s terms of trade rose 0.2 percent in the quarter, but this figure was down 7.3 percent through the year.

“The prices of goods exports fell, led by metal ore prices, after a rise in the December quarter. The price of exported goods was 10.3 percent lower compared to this time last year,” ABS Head of International Statistics Grace Kim explained.

Good exports also fell in volume terms, by 1.5 percent, due to reduced domestic production of coal and iron ore.

Exports of some rural goods also contributed to the fall, driven by cotton after farmers had low harvest yields.

Imports of goods rose 4.5 percent, driven mostly by consumer goods. This reflects a broad increase in the global supply of goods like medicines, clothing, and footwear. Australia also imported more fertilisers after weather events impacted domestic supply.

Incoming Tourist Numbers Rose, Thanks to Taylor Swift and Pink

Services imports fell for the second consecutive quarter (down 1.8 percent), as Australians spent less money on travelling overseas and continued to visit closer overseas destinations.

Services exports rose by 0.6 percent, led by travel, as more tourists travelled to Australia, coinciding with large music events, including concerts by Taylor Swift and Pink. However a smaller-than-average rise in students coming to Australia to study partly offset the rise from tourism. 

One are of growth in the economic data for the first quarter was a rise in government spending, which gave a boost to growth and helped offset a significant fall in net exports.

Spending on operational items rose 1 percent in the first quarter compared to the previous quarter to an inflation-adjusted $135.7 billion ($90.61 billion).

However, total government and public enterprise investment in fixed assets fell 0.9 percent to $33.1 billion. Overall, the ABS estimated total public demand added 0.2 percentage points to the March quarter GDP figure.