Aussie economy takes $4.4bn hit
Written by admin on September 3, 2024
Australia’s current accounts balance has fallen by $4.4bn to a deficit of $10.7bn in the June quarter 2024 in another worrying sign for the strength of the economy.
According to figures for the June quarter released by the Australian Bureau of Statistics on Tuesday, the balance on goods and services fell $3.9bn to $12bn.
Exports of goods fell 4.4 per cent, with lower prices for iron ore and coal driving the decrease.
“This quarter’s current account deficit was the largest since June quarter 2018, reflecting continued falls in bulk commodity prices and higher income paid to nonresidents,” ABS head of international statistics Tom Lay said.
“Iron ore and coal prices saw a second quarterly fall, which is reflected in goods export prices 5.4 per cent lower compared to this time last year.”
The quarterly figures summarise Australia’s economic transactions with the rest of the world and are the last set of numbers that will be calculated into Wednesday’s gross domestic product (GDP) update.
Economists are tipping a meagre growth of about 0.2 per cent for the June quarter, for 0.9 per cent for the year. However, GDP-per-capita will likely be in negative territory.
Oxford Economics Australia’s head of macroeconomic forecasting Sean Langcake said Tuesday’s data supported signs of a slight uptick in GDP.
“There’s plenty of parts in the economy that are going to be subdued but it’s probably going to remain in positive territory,” he said.
While continued growth is largely being supported by continued population growth, Mr Langcake acknowledged households were struggling due to inflation and high interest rates.
“There’s no escaping that we are in the midst of a slowdown that’s been introduced by policy like interest rate rises and fiscal policy,” he added.
However, Wednesday’s figures likely won’t affect how the Reserve Bank approaches interest rates, with the next announcement slated for September 24.
Governor Michele Bullock has all but ruled out lowering the cash rate from its current 4.35 per cent, with Mr Langcake tipping a drop in the second quarter of 2025 at the earliest.
“I don’t think there’s anything here that moves the needle for the RBA. The thing they’re watching most closely is inflation, and hot on the heels of that is the Labor market,” he said.
Treasurer Jim Chalmers earlier this week also warned the June quarter GDP update will be “soft and subdued,” with global uncertainty and the impact of the RBA’s consecutive rate rises “smashing the economy”.
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He has also defended his comments against accusations he was having a dig at the independent central bank or Ms Bullock.
“I think it’s self-evident the interest rate rise is already in the system of putting people under pressure and slowing our economy, and I think the Australian people, frankly, expect me to tell it like it is,” he said.
“I’ve been making that point for some months.”
