Australia records consecutive current account deficit

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Released
3/09/2024
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Balance of Payments and International Investment Position, Australia, June 2024

Australia’s current account balance fell by $4.4 billion to a deficit of $10.7 billion in the June quarter 2024 (seasonally adjusted, current prices), according to figures released today by the Australian Bureau of Statistics (ABS). 

Tom Lay, ABS head of International Statistics, said: "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 non-residents.”

The balance on goods and services fell $3.9 billion to $12.0 billion, and the net primary income deficit rose $0.5 billion to $22.5 billion. 

Exports of goods fell 4.4 per cent, with lower prices for iron ore and coal driving the decrease.

“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,” Mr Lay said.

Exports of Cereal grains and cereal preparations also fell due to reduced Australian wheat production in the 2023-24 season following record highs in the last two seasons.

Exports of services partly offset the fall in goods exports (+6.0 per cent), led by education-related Travel services. This was driven by an increased average spend by non-residents following two consecutive quarters of weakness. 

Imports of goods fell 0.6 per cent driven by Capital goods, reflecting fewer imports of mining equipment.

Imports of services rose 1.1 per cent following two consecutive quarterly falls. This was driven by an increase in imports of Other services with rises across a range of categories. Imports of travel services also increased with Australians travelling for longer and spending more.

Australia’s terms of trade fell 3.0 per cent from last quarter and was down 3.8 per cent from June quarter 2023. 

The quarterly fall in the terms of trade largely reflected a fall in export prices (-3.0 per cent), with imports prices remaining unchanged.

(a) seasonally adjusted estimates at current prices

The net primary income deficit ($22.5 billion) widened for the second consecutive quarter, as primary income debits (outflows) were higher than income credits (inflows). 

Growth in debits came from higher interest payments on Australia’s debt liabilities, as well as a rebound in dividends paid to overseas portfolio investors.

(a) seasonally adjusted estimates at current prices

The financial account had a surplus of $9.4 billion, driven by net inflows of debt (+$9.1 billion) and net inflows of equity (+$0.2 billion). 

Net international investment liability position was down $21.3 billion to $720.0 billion.

“Australia's net international investment liability position, which is the amount that Australia owes to the rest of the world, fell to its lowest level since June quarter 2009. This was primarily due to Australia’s net foreign equity assets rising by $35.1 billion to $546.5 billion, reflecting continued growth in overseas equity markets” Mr Lay said. 

“Rising values in international share markets benefited Australian equity investment, notably the assets of Australian superannuation funds,” Mr Lay added. 

This was partly offset by Australia’s net foreign debt liabilities which grew by $13.8 billion to $1,266.5 billion as domestic borrowers sought additional funding in overseas debt markets. 

The $1.1 billion rise in net trade (seasonally adjusted, chain volume measure) is expected to contribute 0.2 percentage points to the June quarter 2024 Gross Domestic Product (GDP) movement.

Media notes