Current account balance swung to $4.9b deficit in Q1: ABS

Imports of goods rose 4.5% driven by consumptions goods, reflecting a broad increase in the global supply of goods like medicines, clothing and footwear. Australia also imported more fertilizers after weather events impacted domestic supply.

Imports of services fell for the second consecutive quarter (-1.8%), as Australians spent less travelling overseas and continued to visit closer overseas destinations.

Exports of goods fell 1.5%, reflecting reduced domestic production of coal and iron ore. Exports of other rural goods also contributed to the fall driven by cotton reflecting low harvest yields.

Exports of services rose by 0.6%, led by travel services as more tourists travelled to Australia, coinciding with large music events including Taylor Swift and Pink concerts. A smaller-than-average rise in students coming to Australia to study partly offset the rise from tourism.

The financial account had a surplus of $8.3 billion, driven by net inflows of equity ($15.3 billion) and partly offset by net outflows of debt (-$7.0 billion).

Australia's net international investment liability position of $730.3 billion narrowed to its lowest level since June quarter 2009, a drop of $103.9 billion. The rise in Australia's foreign assets grew faster than the rise in foreign liabilities.

Australia's net foreign equity asset position rose by $131.8 billion to $505.5 billion — its largest on record.

Australia’s net foreign debt liability position grew by $27.9 billion to $1,235.7 billion reflecting the depreciation of the Australian dollar.

The $5.5 billion fall in net trade is expected to detract 0.9 percentage points from the March quarter 2024 GDP movement.

The context: The primary income deficit widened for only the second time since June quarter 2022. A rise in primary income debits drove this result, due to higher profits on foreign direct investment, mainly in liquid natural gas (LNG) and industrial real estate.

What they said: ABS head of international statistics Grace Kim said: “The current account deficit reflects a smaller trade surplus, driven by a rise in the imports of goods, while the net primary income deficit increased.

"The prices of goods exports fell, led by metal ores prices, after a rise in the December quarter. The price of exported goods was 10.3% lower compared to this time last year.

"The narrowing of Australia’s international investment liability position reflected a large rise in Australia’s foreign equity assets as Australian investors benefitted from rising values in international share markets."