Export commodity prices lower the current account surplus

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Released
5/09/2023
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Balance of Payments and International Investment Position, Australia, June 2023

Australia’s current account surplus fell by $4.8 billion to $7.7 billion (seasonally adjusted, current prices) in the June quarter 2023, according to figures released today by the Australian Bureau of Statistics (ABS).

Grace Kim, ABS head of International Statistics, said: “The decrease in the current account surplus reflected the fall in prices for Australia’s key export commodities, partly offset by a drop in the net primary income deficit.”

The balance on goods and services decreased $8.0 billion to $31.4 billion and the net primary income deficit dropped $3.2 billion to $23.4 billion. Australia’s terms of trade fell 7.9 per cent, the largest fall since June quarter 2009.

“Exports of goods fell 7.0 per cent, the largest fall since June quarter 2014, as prices for energy commodities like coal and LNG continued to fall from the highs seen in 2022,” Ms Kim added.

Exports of services rose for the sixth consecutive quarter, up 12.8 per cent. This was driven by travel services, reflecting continued recovery in education and personal travel since the re-opening of Australia’s international borders. The number of international students in Australia was above pre COVID-19 levels, for the first time since the beginning of the pandemic.

“Despite falling commodity prices for the June quarter 2023, prices remained high over the 2022-23 financial year. Annual exports of Other mineral fuels, including LNG, exceeded $100 billion for the first time,” Ms Kim said.

Imports of services rose 7.1 per cent. Travel services drove the increase as the number of Australians travelling overseas continued to rise. Imports of goods fell 1.2 per cent, driven by fuels and lubricants as prices continued to fall.

(a) seasonally adjusted estimates in current price terms.

The primary income deficit narrowed to $23.4 billion, driven by a $2.4 billion decline in income debits with weaker profits on direct investments. Weak profits can largely be attributed to the fall in commodity prices over the quarter.

(a) seasonally adjusted estimates in current price terms.

The financial account recorded a deficit of $16.9 billion, driven by net outflows of debt ($14.2 billion) and equity ($2.7 billion).

The $4.5 billion rise in the trade surplus (seasonally adjusted, chain volume measure) is expected to contribute 0.8 percentage points to the June quarter 2023 GDP quarterly movement.

Australia's net international investment liability position was $822.2 billion this quarter, a decrease of $94.1 billion. The rise in Australia's foreign assets outpaced the rise in foreign liabilities.

Australia's net foreign equity asset position rose by $64.1 billion to $347.3 billion. Australia's net foreign debt liability position fell by $30.0 billion to $1,169.5 billion.

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