The chances of today's Australian third-quarter GDP coming in weaker than forecast rose on Tuesday, with the country seeing a near $8 billion plunge in its current account deficit, reaching a deficit of $158 million.
The fall in the current account surplus into a small deficit was due to a slide in commodity prices, especially coal and LNG, and weaker demand.
The Australian Bureau of Statistics reported that the surplus on goods and services fell $8.0 billion to $22.8 billion for the quarter, while the net primary income deficit narrowed by $0.4 billion to $22.3 billion.
Australia's terms of trade fell 2.6% from the June quarter, which was a smaller drop than the 7.9% slump in the previous three-month period. Exports of goods fell 3.1% over the quarter due to declines in prices and quantities for key mining commodities such as coal and liquefied natural gas.
The prices of goods exports decreased for the fifth consecutive quarter, down 1.9% from the second quarter, driven by weakness in coal and farm commodities. Prices of exported goods were 13.3% lower compared to this time last year, according to the ABS.
Still, exports of services rose for the seventh consecutive quarter, up 2.7% over the quarter, driven by travel services, reflecting a continued recovery in education and personal travel.
Imports of goods and services rose 3.3% during the quarter, with travel services imports rising for a third consecutive quarter as Australians continued to travel overseas, as reported by the ABS.
The ABS also noted that the increase in imports of goods was driven by fuels and lubricants as prices rose following production cuts from major oil-producing nations. Imports of industrial and non-industrial equipment also contributed to the rise, especially cars and SUV-type vehicles.
The surprisingly weak outcome led the Australian Bureau of Statistics to estimate that the deficit would detract 0.6% from GDP.
Other data released on Tuesday on government finances, however, was estimated by the ABS to add 0.3% to GDP.
With a minimal contribution from consumption, especially retail sales, GDP looks like it will come in under 2%, with the forecast range at 1.6% to 1.9%.
