Australia Records a $10.7 Billion Current Account Deficit for June Quarter 2024

September 3, 2024 TruthUSA

The current account deficit for this quarter reflects ongoing decreases in bulk commodity prices and increased income paid to non-residents, according to Tom Lay from ABS.

Australia’s current account deficit expanded to $10.7 billion (US$7.2 billion) in the June quarter of 2024, as reported by the Australian Bureau of Statistics (ABS) on Sept. 3.

This marks the largest deficit since June 2018, driven by falling commodity prices and higher payments to non-residents.

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

A 4.4 percent decline in goods exports, especially in prices for key exports like iron ore and coal, significantly contributed to the decrease.

Tom Lay, ABS Head of International Statistics, highlighted the factors influencing this downturn.

“This quarter’s current account deficit reflects continued falls in bulk commodity prices and higher income paid to non-residents,” he said.

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Iron ore and coal prices continued to decline for the second consecutive quarter, resulting in a 5.4 percent decrease in goods export prices compared to the same period last year.

The export sector faced challenges, with reductions in cereal grains and preparations due to decreased Australian wheat production for the 2023-24 season following record highs in the previous two seasons.

Despite obstacles, the services export sector saw some improvement with a 6 percent increase, primarily driven by education-related travel services. This was attributed to higher average spending by non-residents after two weak quarters.

On the import side, goods imports saw a slight 0.6 percent decrease, mainly due to reduced imports of capital goods, particularly mining equipment.

However, services imports increased by 1.1 percent after two consecutive quarterly declines, driven by higher spending on various service categories and increased travel spending by Australians.

Australia’s terms of trade—reflecting export prices relative to import prices—fell by 3 percent from the previous quarter and was down 3.8 percent compared to the June quarter of 2023. This decrease was mainly due to a 3 percent drop in export prices while import prices remained steady.

This data poses a significant challenge for the government, which is already dealing with inflation and rising living costs.

Treasurer Jim Chalmers faced accusations of blaming the Reserve Bank of Australia (RBA) ahead of anticipated GDP figures on Sept. 4, as forecasts predicted another GDP decline.

In response to the allegations, Chalmers affirmed that both the RBA and the government are working towards the same objective.

Shadow Treasurer Angus Taylor argued for multiple measures to manage inflation, criticizing the Opposition’s view on over $92 billion in government expenditure.

“Labor emphasizes its opposition to extensive power line construction, deeming it inappropriate for our nation.”

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