Australia’s current-account deficit narrowed more than economists forecast in the three months through June as stronger shipments of metal ores and other minerals outpaced a decline in coal exports.
The shortfall on goods, services and investment was A$11.8 billion ($12.1 billion) from a revised A$13 billion in the first quarter, the Bureau of Statistics said in Sydney today. The median estimate in a Bloomberg News survey of 21 economists was for a A$12.2 billion gap. Net exports added 0.3 percentage points to gross domestic product growth in the second quarter, the bureau said today.
Reserve Bank of Australia Governor Glenn Stevens probably will leave the benchmark interest rate at 3.5 percent today, according to all 24 economists surveyed by Bloomberg. A high currency has hurt earnings for manufacturers and retailers, helping create what the RBA has referred to as a multispeed economy with those industries lagging behind the performance of companies linked to the nation’s mining investment boom.
“Export prices edged higher as the Australian dollar depreciated and volumes more than reversed a first-quarter fall,” Westpac Banking Corp. economists led by Bill Evans wrote in a research report before the release. “The import bill rose by around 3 percent, with prices up by about 2 percent.”
The net-income deficit narrowed to A$10.2 billion in the second quarter from A$10.7 billion in the previous three months, today’s report showed. The goods and services trade balance recorded a A$1.38 billion deficit in the second quarter compared with a A$2.01 billion shortfall in the prior quarter.
The current account is the broadest measure of trade because it includes investment flows as well as goods and services shipments. A deficit represents money Australia has to borrow overseas to pay for the goods and services it imports and to finance investment not covered by local savings.