Australia’s Deficit Exceeds $52 Billion Due to Rise in Imports Driven by EVs
The trade deficit at the end of the December quarter was $12.5 billion, but positive retail spending data could increase that number even further.
Australia closed out 2024 with an annual current account deficit of $52.4 billion (US$32.8 billion), the worst result since 2016, as per the latest data from the Australian Bureau of Statistics (ABS).
Despite this, the balance improved by $1.3 billion (seasonally adjusted, current prices) to a deficit of $12.5 billion in the December quarter of 2024. This marks the second consecutive improvement, with the lowest point being in the June quarter of the same year, where it dropped to a deficit of $16.3 billion.
Nevertheless, it remains the nation’s seventh consecutive current account deficit, indicating that people and businesses are spending significantly more on imported goods and services than they are exporting.
Tom Lay, ABS head of International Statistics, attributed the improvement to the surplus on trade in goods and services increasing by $3.7 billion to $7.5 billion.
This rise in terms of trade, the first since December 2023, was driven by the growth in export prices for iron ore and gold. However, the widening net primary income deficit, increasing by $2.3 billion to $19.8 billion, partly offset this improvement.
Exports saw an increase across rural goods, iron ore, and intellectual property services by 2.9 percent in the December quarter, with chickpea exports rising after India temporarily lifted tariffs on chickpea imports.
Services exports also saw a rise of 4.6 percent, driven by increased intellectual property services linked to pharmaceuticals and computer software.
“Other personal travel also increased this quarter, with visitors from the United States of America contributing to the rise, benefiting from the Australian dollar’s depreciation against the U.S. dollar,” noted Lay.
Goods imports rose by 1.5 percent, with electric vehicle imports driving the increase. Additionally, processed industrial supplies increased, particularly in fertiliser imports.
“The number of Australians travelling overseas remained high following elevated travel to Europe in the September quarter. Conversely, Australians preferred less expensive and closer-to-home destinations in the December quarter,” Lay added.
“Japan witnessed a significant increase in Australian visitors during the quarter, with favourable exchange rates possibly playing a role.”
Spending on Food Up
While the rise in retail spending figures released today is positive for the struggling post-pandemic sector, it could potentially lead to a further deficit growth in the March quarter unless exports increase.
According to seasonally adjusted figures from the ABS, Australian retail turnover rose by 0.3 percent in January 2025, following a decline of 0.1 percent in December 2024 and an increase of 0.7 percent in November.
Robert Ewing, ABS head of business statistics, mentioned that the growth in retail spending since mid-2024 has been driven by discretionary spending, but the January increase was primarily due to food-related spending.
Australian retail total monthly turnover, current prices, to January 2025.
Australian Bureau of Statistics
Food-related spending rebounded in January after declines in the previous month, with increases in cafes, restaurants, and takeaway food services (1.1 percent) and food retailing (0.7 percent).
“High attendance at major events, including record participation at the Australian Tennis Open and cricket events, boosted spending on catering services,” Ewing noted.
“Food retailing also saw a resurgence in January, especially in Victoria where disruptions in the supply chain negatively affected supermarket spending in December.”
Most non-food industries saw growth, with other retailing (2.4 percent), clothing, footwear, and personal accessory retailing (2.0 percent), and department stores (0.6 percent) leading the way.
However, there was a substantial decline in household goods retailing (-4.4 percent).
“The drop in household goods follows four consecutive increases driven by extensive discounting activities during Black Friday and Cyber Monday sales events,” Ewing explained.
