Australia’s balance sheet has received a bit of a blow, which may mean a sluggish result for June quarter gross domestic product (GDP) figures, due out on Wednesday.
Balance of payments and international investment data showed the current account deficit widened to $9.35 billion in the June quarter, the Australian Bureau of Statistics said.
The surplus on goods and services fell two per cent in real terms, which would deduct 0.04 percentage points from growth in the June quarter measure of GDP, the ABS said.
CommSec chief economist Craig James said the international trade figures pointed to modest economic growth in the June quarter.
“The contribution of net exports to GDP in the June quarter was effectively zero, and then you’ve got government spending which is actually going to detract from GDP growth – it suggests a very modest outcome in terms of the economy for the quarter,” Mr James said.
“It suggests that, for the first time in a long time, we could see the US economy growing at a faster rate than Australia, which is just quite remarkable.
“The positive is that the trade sector is not restraining or detracting from economic growth in a big way. But the other side of the equation, the bad news, is that exports are not adding to growth at the moment.”
RBC Capital Markets senior economist Su-Lin Ong said her forecast of fairly weak 0.5 per cent economic growth for the June quarter is staying unchanged.
“Net exports are pretty much not going to make a contribution to growth,” she said.
“The larger-than-expected current account deficit and weaker-than-expected net export contribution to growth may see some final downward tinkering to consensus forecasts for second quarter GDP.
“Today’s net exports estimate shifts the risk in the other direction given that we were looking for a small contribution.
“Accordingly, we remain comfortable with our forecast, expected confirmation of sub-tend growth, with the national account details likely to tell a story of tepid domestic demand and a somewhat disappointing quarter for the external sector.”
The data also showed that Australia’s terms of trade on goods and services rose 0.1 per cent in the June quarter, seasonally adjusted.
The terms of trade are the price of exports relative to the price of imports.
