Australia’s current account surplus widens in Q1, small drag on GDP

By Stella Qiu

SYDNEY (Reuters) – Australia’s current account surplus widened in the March quarter, helped by strong exports of resources and travel services, with net exports proving to be a much smaller drag on growth than first thought.

Data from the Australian Bureau of Statistics on Tuesday showed the current account surplus widened to A$12.3 billion ($8.14 billion) in the first quarter, from a revised surplus of A$11.7 billion the previous quarter.

It also beat forecasts of a A$15 billion surplus.

Exports of goods and services rose 0.4%, driven by strong rises in iron ore and lithium, with shipments of lithium hitting a record high last quarter, said Grace Kim, ABS head of International Statistics.

The return of international students also helped.

“Exports of travel services recorded the highest quarterly increase on record as more international students came to Australia for on-campus learning,” said Kim.

In total, net exports would subtract a small 0.2 percentage points to gross domestic product (GDP) in the first quarter, according to ABS, which is much smaller than the forecasts for a 0.6 percentage point drag.

Other data out on Tuesday showed government spending added 0.2 percentage points to GDP, figures for which are due on Wednesday.

Analysts had forecast GDP to rise 0.3% in the first quarter from the previous quarter, and up 2.4% for the year.

The Reserve Bank of Australia (RBA) would unveil its June monetary policy decision later in the day. Markets are leaning towards a pause in its tightening cycle, although they have priced in a sizeable chance – about 40% – that the RBA would hike by 25 basis points.

($1 = 1.5117 Australian dollars)

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