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(Australian Associated Press)
Economists have slightly trimmed GDP forecasts after Australia’s current account deficit fell, but by less than they had expected.
The deficit narrowed 11 per cent to $10.7 billion in the three months to September, missing consensus expectations of a fall to $10.2 billion despite net exports rising by more than predicted.
The current account deficit decreased from the June quarter’s $12.1 billion, Tuesday’s seasonally adjusted figures from the Australian Bureau of Statistics showed.
Westpac rounded down its forecast for Wednesday’s GDP growth data from 0.7 per cent for the quarter to 0.6 per cent, with annual growth forecast at 3.3 per cent – little changed from the 3.4 per cent in the previous print.
Royal Bank of Canada’s Su-Lin Ong also moved her quarterly forecast down to 0.6 per cent, but noted the impact was minimal.
“Following weaker inventories and company profits yesterday, we noted downside risk to our GDP forecast but today’s stronger net export print and continued decent government spending has tempered this somewhat,” she said.
The balance on goods and services was a surplus of $6.6 billion, a rise of $2.7 billion on the June quarter surplus of $3.9 billion.
BIS Oxford Economics chief Australia economist Sarah Hunter said net exports are likely to contribute more to growth than previously expected, but she remained cautious on the outlook for consumer spending and GDP growth, given the weakness in consumer goods and services imports.
“Higher commodity prices played a part, but surplus on the volume trade balance more than doubled – assuming there are no substantial data revisions, net exports are set to add a healthy 0.4 percentage points to September quarter GDP growth,” she said.
Exports of rural goods, in seasonally adjusted terms at current prices, rose $288 million, or two per cent, to $12.4 billion, with both prices and volumes edging higher.
Offsetting the rural export rise were cereal grains and cereal preparations, with value down 11 per cent, or $223 million, on a 21 per cent volume drop and a 13 per cent price increase. .
Fuel, metals and coal powered a three per cent rise in the value of non rural exports, with fuels alone adding an extra $1.72 billion, or 14 per cent for the quarter on higher prices and volumes.
Iron ore and mineral exports fell two per cent, or $587 million, with volumes down six per cent and prices up three per cent.
There was an $84 million, or two per cent, increase in food and beverages imports to Australia with the nation’s overall goods debits rising $1.5 billion to $80.5 billion.
Imports of fuels and lubricants rose eight per cent to $802 million.
Services debits rose $474 million, or two per cent, to $24.3 billion.
Westpac senior economist Andrew Hanlan said the key market uncertainties were consumer habits and the drought – with a lack of partials around consumer spending on services and on farm inventories.
“The drought in NSW and surrounding areas is likely to have its biggest impact in quarter four and qaurter one – but there is a risk of an inventory drag in quarter three,” he said.