If Australia avoids a recession in today’s (Wednesday) national accounts for the June quarter, it will be due to positive contributions from trade and government financial transactions.
Data from the Australian Bureau of Statistics on Tuesday, covering the June quarter current account and government financial dealings for the same period, showed that a surprisingly strong contribution to growth is expected from both areas.
The ABS stated that the $1.1 billion rise in net trade (seasonally adjusted) “is expected to contribute 0.2 percentage points to the June quarter 2024 GDP,” while public sector demand is expected to contribute 0.4 points to GDP.
This is expected to somewhat offset negative contributions from consumption and investment—the latter declined by 2.2% in the quarter, with falls in all parts, especially building and engineering, while retail volumes fell by 0.3% in the quarter, indicating weak household spending.
This led to a slight increase in market estimates for the quarter, with the consensus rising to 0.3% from earlier estimates of 0.1% and 0.2%. The annual growth rate is expected to be slightly stronger at 1% or 1.1%, compared to the 0.9% estimate at the end of last week.
The ABS noted that the contribution from total public demand is expected to be composed of a 0.3 percentage point rise from government spending and a 0.1 percentage point rise from government investment.
The ABS current account report revealed a further weakening in Australia’s terms of trade, with iron, coal, and LNG prices remaining weak.
Australia’s terms of trade fell by 3.0% last quarter from March and were down 3.8% compared to the June quarter in 2023.
The quarterly decline in the terms of trade largely reflected a 3.0% fall in export prices from the March quarter, with import prices remaining unchanged. Export prices fell by 5.4% over the year to June 30, according to the ABS.
