Australia’s Account Surplus Reached Record High $20.5 Bn in June Quarter But Difficult Days Ahead

A furnace pouring steel. yasin hm / Unsplash

Australia recorded its highest account surplus over the June quarter on the back of iron ore exports while domestic economic activity also increased.

The Australian Bureau of Statistics (ABS) released figures on Tuesday that said Australia’s current account surplus increased by $1.5 billion (U.S.$1.1 bn) to a record $20.5 billion (U.S.$15 bn) in the June quarter—the ninth and longest consecutive quarterly accounts increase.

The account surplus was driven by a trade surplus that was led by sky high prices and demand for iron ore and other minerals from China.

The three months to June, the value of exports for goods and services increased by 6 percent while the value of imports increased by 4 percent.

In the month of June alone, Australia exported a record high $15 billion of ore to the Chinese communist regime.

While the value of exports increased, the volume of exports actually decreased due to shipping disruptions from various reasons, such as COVID-19 and weather.

While the trade sector recorded a surplus, the financial account fell a further $9.6 billion into a total deficit of $24.2 billion, as more Australians had their investments moved overseas.

“The movement was due to resurgent offshore investment activity by Australian superannuation and investment funds as a result of a more positive global economic outlook and favourable equity markets conditions overseas,” ABS Head of International Statistics Andrew Tomadini said.

The ABS also announced today that the nation’s gross domestic product (GDP) increased by 0.7 percent over June quarter and 1.4 percent over the 2020-21 financial year.

“Domestic demand drove growth of 0.7 per cent this quarter which saw continued growth across household spending, private investment, and public sector expenditure,” ABS Head of National Accounts Michael Smedes said.

Treasurer Josh Frydenberg speaks to the media during a press conference at Parliament House in Canberra, Australia, on Sept. 1, 2021. AAP Image/Mick Tsikas

Treasurer Josh Frydenberg said these numbers confirm that the Australian economy had grown over the quarter, ahead of market expectations, but admitted the economy had difficult days ahead.

“But today’s national account numbers underline the fact that our economy remains resilient, that its fundamentals remain sound, that our economy remains strong, and that we are in a position to bounce back strongly as an economy and as a country when lockdowns come to an end,” Frydenberg told media.

Smedes noted that the earlier short lockdowns had minimal impact on household spending, while the current extended lockdowns began after the June quarter.

This means the data does not reflect Australia’s current economic situation after extended hard lockdowns were implemented in the country’s two biggest states, New South Wales and Victoria.

The lockdowns have devastated the NSW jobs sector, with the Institute of Public Affairs (IPA) finding that between June 26 and July 17, 200,000 small business employees, 64,000 medium-sized business workers, and 12,000 large business workers were laid off.

Australia’s iron ore exports have also been heavily impacted by plummeting prices. According to data from Trading Economics, iron ore prices dropped almost 40 percent in one month from the later half of July, before slightly recovering.