Australia: Q3 current account deficit shrinks as export earnings advance - Westpac

Andrew Hanlan, Research Analyst at Westpac, explains that the Australia's current account deficit (CAD) narrowed in the September quarter and remains well contained with a print of $10.7bn in the September quarter, a $2.8bn improvement on the previous quarter.

Key Quotes

“As a share of the economy, the CAD deficit represents 2.2% of GDP which is well below the post 1990s average of 4.2%.”

“An improved trade performance on higher export earnings was key to the smaller current account deficit. The trade surplus lifted to $6.6bn in the period, up from $2.8bn three months earlier.”

“The trade surplus represents a sizeable 1.4% of GDP. Since the mid-1970s there have been only 6 instances when the surplus has been 1.3% of GDP or more (three of which have occurred since the end of 2016).”

The terms of trade advanced by 0.8% in the quarter and rose by 2.7% over the past year. Notably, the terms of trade is now 20% above the low at the start of 2016.”