SYDNEY: Australia’s current account surplus rose sharply in the December quarter as iron ore and coal exports surged, a much-needed boost to the economy that lessens the risk of recession.
Other data from the Australian Bureau of Statistics (ABS) showed government spending also rose in the quarter, helping offset a steep drag from inventories.
ABS data showed the current account surplus jumped to A$11.8bil in the fourth quarter, from an upwardly revised A$1.3bil the previous quarter. That compared to forecasts of a A$5.6bil surplus.
The ABS said net exports – driven by higher export prices and rising shipments of mining commodities – would add 0.6 percentage points to gross domestic product (GDP) in the fourth quarter, when analysts had thought they would add only 0.2 percentage points.
Government spending also rose 0.4% in the quarter, which added 0.1 percentage point to GDP.
The spending helped offset a sharp fall in mining inventories in the quarter, which looked to have shaved one percentage point off growth.
“Coupled with solid capital expenditure data and a modest boost from public demand, GDP growth should be positive, albeit unspectacular in tomorrow’s print,” said Sean Langcake, head of macroeconomic forecasting for Oxford Economics Australia.
Figures for fourth-quarter GDP are due soon. The median forecasts had pencilled in a subpar increase of 0.3%, which would see annual growth slow to 1.4%.
The slowdown in the economy is a major reason the Reserve Bank of Australia held interest rates steady at 4.35% in February, having raised them by 425 basis points since May 2022 to tame inflation.
Markets are confident that the tightening is over, but futures pricing suggests any rate relief won’t come until September. —Reuters
