Australia: Back to back current account surplus – Westpac

Andrew Hanlan, analyst at Westpac, points out that Australian economy has registered back-to-back current account surplus and for the first time in 46 years.

Key Quotes

“The current account printed a surplus of $7.9bn (1.6% of GDP) for the September quarter. That is an improvement on a $4.7bn surplus for June. For the past year, the current account is in surplus to the tune of $4.3bn.”

“The key (but not sole) driver of the improved performance is sharply higher export earnings largely centred on rising commodity prices. Notable, was the iron ore price spike following the tailings dam disaster in Brazil. The iron ore price has since pulled-back in August.”

“The trade surplus widened from $19.3bn to $21.1bn (4.2% of GDP) in Q3, a record high (back to 1959). The trade position progressively improved from a $12.0bn deficit in 2015 Q4, when commodity prices were at their lows.”

“In the September quarter, the terms of trade rose by 0.4%qtr, 7.8%yr.”

“Export volumes are in an uptrend, increasing in Q3 by a modest 0.7%qtr, 3.3%yr.”

“Import volumes are falling, -0.2%qtr, -1.5%yr, at a time of weak domestic demand and a lower AUD. In value terms, the import bill is little changed over the year, +1.2%.”