The chances of a slightly better than expected set of growth figures in tomorrow’s national accounts have risen with a solid balance of payments for the March quarter.
But the figures also show the impact of the dying glory days from the punctured resource boom with a huge, 87% contraction in our quarterly current account deficit.
But the odds are still on a fall in growth of around 0.2%.
Complicating matters was a sharp rise in government spending in the government finance figures for the March quarter, but that was offset by a fall in spending on capital projects.
The Australian Bureau of Statistics said the seasonally adjusted estimate for the March quarter’s improved balance of payments position “is expected to add 2.2 percentage points to growth in the March quarter 2009 volume measure of GDP."
The ABS said by its figures, the deficit shrank 87% in the quarter as the country’s iron ore and coal exporters received the last months’ payments from the record iron ore, coking and thermal coal export prices for the March 31 shipping year.
Iron ore and coal prices have fallen by between 33% and more than 50% since then in contracts (although the Chinese steel mills have yet top settle iron ore prices for the 2010 year).
The ABS said that "the current account deficit, seasonally adjusted, fell $1,743m (or 27%) to $4,614 million in the March quarter 2009.
"The surplus on goods and services increased $900m (22%) to $5,075m. The income deficit decreased $862m (8%) to $9,498m.
"In seasonally adjusted chain volume terms there was a decrease of $5,964m (87%) in the deficit on goods and services. This is expected to add 2.2 percentage points to growth in the March quarter 2009 volume measure of GDP.
The deficit for the March quarter was the lowest current account deficit as a proportion of GDP since the September quarter 2001.
The smaller current account deficit was driven by a sharp increase in the trade surplus, which rose from $4.2 billion in the December quarter 2008 to $5.1 billion in the March quarter 2009.
This is the largest trade surplus recorded since the series began in the September quarter 1959.
The $862 million narrowing of the net income deficit also contributed to the narrowing of the current account deficit.
Export volumes rose by 2.7% in the March quarter, to remain 3.5% higher through the year.
Exports of rural commodities rose 18.3%.
Non-rural commodities, services and other goods also rose in the quarter, but these increases were partially offset by a fall in exports of elaborately transformed manufactures, reflecting weaker global demand.
Import volumes fell by 7.0% in the March quarter, to be 10.35 down on a year earlier (Another solid indicator of the recession were are having).
This fall was driven by lower imports of intermediate and other merchandise goods, consumption goods imports, and capital goods imports.
That in turn showed up in the lower investment figures last week for the March quarter.
The terms of trade fell 7.8% in the March quarter, driven by lower export prices. Export prices fell by 9.9%.
But as good as that was there was a significant worsening in Australia’s net international investment position (IIP).
The ABS said the net IIP rose $20.8b to a net liability position of $734.6b in the March quarter 2009.
"Australia’s net foreign debt liability decreased by $21.1b to a liability position of $674.2b. Australia’s net foreign equity liability increased $41.9b to a liability position of $60.5b."
Meanwhile the impact of the economic slump on Government tax revenues was underlined by the report on Government finances for the March quarter.
The ABS said there was an 11.6% fall in tax revenues for all levels of Government in the quarter to $78.846 billion, while operating balance fell sharply and borrowings grew.
The ABS said key figures for the national accounts, Government Final Consumption expenditure and Gross Fixed Capital Formation for general government and public corporations, both produced contrasting outcomes.
Government final spending rose 0.3%, but Gross fixed capital spending fell 0.6%.
On top of this the RBA said gross fixed capital formation by public corporations fell by 4.8%; total public sector gross fixed capital formation (general government and public corporations combined), fell by 2.5% in the quarter and total public sector spending, including government consumption and public sector capital formation, fell by 0.2%.
Government finance is perhaps the biggest imponderable in the way the growth figures emerge from the ABS.
But the net impact looks like being slightly negative; perhaps positive, according to some economists late yesterday.
Government finance will probably detract 0.1 percentage points from growth, according to estimates from the market.
One point is certain the surprisingly large 7.2% in corporate profits was far above many estimates (as was the 0.2% drop in wages and salaries in the quarter) and could be very influential in the final outcome.
But then the 2.2% contribution from exports was also very, very strong.
On balance it looks like a mild bout of negative growth and a recession, but any revisions to September and December figures should be closely watched as well.
