Meanwhile, in separately released data, the ABS reported that public demand is expected to add 0.2ppt to the quarterly growth figure led by consumption.
Balance of Payments — Q2 | By the numbers
- Current Account deficit increased by $1.79bn to -$A13.47bn versus market expectations for a smaller deterioration to -$11bn (prior rev -$11.68bn from -$10.47bn).
- Trade Surplus declined by $532m in Q2 to $A2.81bn (prior rev $3.34bn from $4.08bn)
- Net exports are expected to add 0.1ppt to Q2 GDP growth (exp +0.1ppt, prior +0.3ppt)
Balance of Payments — Q2 | The details
The deterioration in the current account deficit was larger than expected and was driven by an increased primary income deficit of $1.10bn to $A15.93bn, with returns to foreign investors up 6% in the quarter. The recent outcomes for the current account deficit have been; -$11.68bn in Q1 2018, -$16.43bn in Q4 and -$12.45bn in Q3.
Over the quarter, the trade surplus reduced by $532m to $A2.81bn. Export volumes lifted by +1.1%q/q, with goods +1.1% and services +1.2%. Import volumes lifted by +0.4%q/q on mixed detail; goods +1.7% but services -3.8%. Given export volumes increased by more than import volumes, the ABS reported that net exports are expected to add +0.1ppt to GDP growth in tomorrow's National Accounts for Q2.
The volume data reflected movements in prices, with export prices up by +1.4% compared to imports at +2.8%. As a result, the Terms of Trade fell -1.3% in the quarter.
Balance of Payments — Q2 | Insights
With all partial indicators now to hand, market economists will now revise their assessments for GDP growth in Q2. So far, indications are that the outcome will be around +0.6% to +0.7% in Q2, which would take annual growth to +2.7% to +2.8% — a moderation from the +3.1% annual pace in Q1.
