Australia records its first current account deficit in three years

FILE PHOTO: A forklift unloads shipping containers from trucks at a storage facility located near Sydney Airport

Data from the Australian Bureau of Statistics on Tuesday showed that the current account showed a deficit of $2.3 billion (€1.54 billion) in the July-September quarter.

This was lower than the A$14.7 billion surplus in the previous quarter and well below expectations for a A$6.2 billion surplus.

“The deficit reflects a smaller but strong trade surplus, which was offset by a record high income deficit in the September quarter,” said Grace Kim, acting head of international statistics at the Australian Bureau of Statistics.

The income shortfall widened to A$33.2 billion in the quarter, driven by high dividend payments to foreign investors.

However, net exports trimmed only 0.2 percentage points from GDP growth in the third quarter, while analysts expected a 0.6 percentage point decline.

Separate data from Tuesday, on the other hand, showed that government spending contracted 0.2 percentage point from growth in the quarter.

GDP data is expected on Wednesday. Before Tuesday’s stats were released, analysts had expected growth of 0.7% in the quarter, mainly driven by household consumption.

Annual growth is estimated at 6.3%, mainly due to a one-time boom late last year as the economy rebounded after the outbreak of a pandemic.

Resilient demand will cause the Reserve Bank of Australia (RBA) to raise interest rates by another 25 basis points on Tuesday to a ten-year high of 3.10%, the eighth rise in as many months. [AU/INT]

Markets recently lowered expected peak interest rates to between 3.35% and 3.60%, from more than 4.0%, after a sudden slowdown in inflation in October.

There is even speculation that the Reserve Bank of Australia will take a break this week as the tough tightening that has already taken place is not fully reflected in mortgage payments.

See also  The Greek Track breaks up with Coach Slaughter after successful years: 'We weren't on the same page' | Tennis

And many borrowers who took out fixed mortgages with two or three years to maturity in 2020 and 2021 when interest rates were at record lows will also face sudden and painful increases in repayments next year.

David Blank, head of Australian economics at ANZ, thinks the RBA will pass an increase on Tuesday, in part because the next meeting isn’t until February and employment and wages data are still strong.

“However, we are alert to any material changes in the statement after the meeting.”

In particular, any indication of a possible pause in the statement would be a cautious development.

Leave a Reply

Your email address will not be published. Required fields are marked *