Australia logs Q1 current account surplus, but GDP contribution slips

© Reuters.

Investing.com -- Australia maintained a strong current account surplus through the first quarter of 2023, aided largely by steady commodity exports, although an unexpected drop in the trade surplus is now expected to dent first-quarter GDP.

The country logged a current account surplus of A$12.3 billion (A$1 = $0.6615) in the three months to March 31, data from the Australian Bureau of Statistics (ABS) showed on Tuesday. The reading was well above expectations for a surplus of A$6.5B, but lower than the A$14.1B seen in the prior quarter.

But Australia’s trade surplus fell A$1.2B, which is expected to detract 0.2 percentage points from the March quarter gross domestic product, the ABS said in a statement. The figure largely missed estimates for a contribution of 1.3 percentage points, as well as the prior month’s reading of 1.1 percentage points.

Australia’s key commodity exports faced pressure in the first half of 2023, as worsening economic conditions across the globe dented demand for commodities. A crash in metal prices, stemming from concerns over China, also weighed heavily on the margins earned from commodity exports.

Government expenditure also remained well above revenue during the quarter, with the primary income deficit widening to A$28.5B from A$27B in the prior quarter.

Tuesday’s data comes just ahead of first-quarter GDP data due on Wednesday, and could indicate a further slowing in economic growth as Australia grapples with rising interest rates and inflation.

An interest rate decision by the Reserve Bank is also due later in the day, although markets are split over whether the bank will hike rates further. While inflation unexpectedly rose through April, other economic indicators for the month point to cooling growth in the country.