Current Account and GDP Preview - Clouds on the Horizon?

• The current account deficit widened from $11.7 billion in the March quarter to $13.5 billion in the June quarter, despite a narrowing in the goods and services surplus.
• Exports volumes continued to recover, rising 1.1% in the June quarter.  It followed a 3.0% increase in volumes in the March quarter after hitting a soft patch late last year. The ramping up of LNG production continued to support export volumes. Rural good exports also rose as the drought lifted slaughter rates.
• Import volumes rose 0.4% in the June quarter, supported by imports of consumption goods and capital goods.
• Net exports are consequently expected to contribute 0.1 percentage points to growth. It follows a contribution of 0.3 percentage points to growth in the March quarter.
• We expect a relatively healthy outcome of 0.8% GDP growth in the June quarter and 2.9% in the year. On balance, the data over the past few weeks has not diverged significantly from our expectations. Consumer spending is expected to be a key driver of growth, while business investment, public spending and dwelling investment are expected to provide small contributions to growth. There are however, downside risks to the outlook emerging.

 

Please see the attached report for more information.

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