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Andrew Hanlan, analyst at Westpac, notes that the Australia’s current account deficit (CAD) narrowed to $7.2bn in the December quarter, around the historic lows for the period since the start of the 1980s.

Key Quotes

“As a share of the economy, the CAD deficit represents 1.5% of GDP which is well below the post 1980s average of 4.2%.”

“Key to the shrinking deficit is strength in export earnings, advancing on higher commodity prices.”

“The trade surplus rose to $8.4bn in the December quarter, a $2.7bn improvement on September. The trade surplus represents 1.75% of GDP, the largest surplus since 1973.”

“Export earnings grew by 3.3% in the quarter, boosted by higher commodity prices. The import bill rose by a relatively modest 1.0% with volumes flat (up 0.1%).”

“Import volumes were flat (+0.1%) after a 1.0% fall in Q3 – against the backdrop of sluggish domestic demand.”

“The terms of trade advanced by 3.2% in the quarter and rose by 6.1% over the past year. Notably, the terms of trade is now 24% above the low at the start of 2016.”