Andrew Hanlan, Research Analyst at Westpac, explains that Australia’s current account deficit (CAD) narrowed early in 2018, reversing a temporary deterioration in the previous period, as the trade position recovered.
Key Quotes
“The current account printed at -$10.5bn in Q1, following outcomes of -$14.7bn in Q4 and -$11.7bn in Q3.”
“As a share of the economy, the CAD deficit represents 2.3% of GDP. This is below the decade average of 3.6% and well below the post 1990s average of 4.2%.”
“In Q1, the trade balance returned to surplus, to the tune of $4.1bn. In 2017, the surplus evaporated, shrinking progressively from $6.4bn in Q1 to $1.4bn in Q3 and then slipping into deficit in Q4, -$1.0bn.”
“Export earnings began the year on a stronger note, up 7.4% in the quarter, on higher prices and increased shipments. By contrast, 2017 was a challenging year, with export earnings stalling (+0.4%), with prices little changed (0.3%) and shipments moving sideways (0.2%).”
“In Q1, the import bill increased by a moderate 2.0%.”
“Real net exports added a solid 0.35ppts to activity in Q1, a partial reversal of the hefty 0.65ppts drag in Q4, to be broadly neutral over the past year, -0.1ppts.”
“Export volumes advanced by 2.4% in the quarter, a resumption of the uptrend after a one-off dip in Q4, -1.5%.”
“Import volumes are increasing, +0.5%qtr, +4.7%yr in Q1, to meet the expansion in domestic demand.”
“The terms of trade lifted by 3.3% in the March quarter, as export prices rose 4.8%, led higher by commodities. Over the past year, the terms of trade consolidated, down by only 2.6% after a 25% bounce the year prior.”
“The net income deficit widened in Q1, to $14.6bn, up from $13.6bn, on rising returns to foreign investors.”
Share
