Australia's current account deficit narrowed 14% to $2.865 billion in the September quarter, mainly due to a 6% fall in the income deficit and a $158 million increase in the surplus on goods.
Balance of payments figures released today by the Australian Bureau of Statistics shows the surplus on the balance of goods and services (net exports), in seasonally adjusted chain volume terms, fell $211 million.
As a result, it is expected to detract 0.1% from GDP growth in the quarter.
In seasonally adjusted, current price terms, exports fell 2% to $786 million, with volumes down 2% and prices constant. Rises in exports of rural goods (1%), especially grains and cereal preparations (volumes up 19%, prices down 4%), and meat and meat preparations (volumes down 2%, prices up 4%), were offset by a 3% drop in exports of non-rural goods, largely as a result of a 9% drop in non-monetary gold, reflecting a 12% fall in volumes and a 3% rise in prices.
On the other side of the ledger, imports of consumption goods fell 3%, due to falling volumes (2%) and prices (1%), predominantly due to a large fall in non-industrial transport equipment (7%). Imports of capital goods rose 6%, thanks to a jump in volumes, with the largest increase in telecommunications equipment (27%), followed by machinery and industrial equipment (7%).
The deficit on services narrowed in the quarter by $19 million, with exports up 1% to $7.973 billion and imports up $31 million to $8.040 billion.
Westpac economist Huw McKay says that while today's figures continue the trend of improvement in external accounts evident since late 1999, it "may also be the final instalment".
"A medium-term deterioration in the external accounts will gather force though 2002, highlighted by a return to regular deficits, or 'loose change' surpluses for the monthly trade accounts.
"The deterioration will be driven by imports outstripping a subdued export performance in the uncertain global environment," he says.
As a consequence, McKay predicts the external sector will be a drag on GDP growth in quarter three and into 2002.
"The offsetting factor in 2002H1 will be housing activity, where the present and continuing pull-forward of first home buyers will keep the sector on the boil," he says.