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Highlights
- Australia’s current account surplus rose during the September 2021 quarter.
- The net primary income deficit increased by AU$7.7 billion.
- The observed rise in trade surplus can be attributed to the rising prices of coal and other fuels.
The Australian Bureau of Statistics (ABS) has recently reported a rise in the nation’s current account surplus during the September 2021 quarter. As per ABS, the seasonally adjusted current account surplus rose by about AU$1 billion to reach a record value of AU$23.9 billion in the last quarter. The observed surge in the current account surplus came alongside an AU$8.1 billion increase in the balance on goods and services surplus.
Interestingly, exports have significantly improved since the domestic reopening of borders, even as supply chain issues persist in the backdrop. Specifically, net exports have contributed one percentage point to the overall economic activity. One can expect the upcoming data on the national Gross Domestic Product to receive a boost from the improved trade figures.
Data at a glance
The report by ABS reveals that total exports of goods and services increased by AU$9.7 billion in Q3, which reflects a rise of 8%, while imports also increased by AU$1.6 billion, representing a 2% rise. The rise in both exports and imports further reflects the impact of reopening economies across the globe. As countries have removed domestic lockdowns, economic growth has bolstered across the nations, allowing for increased trade flow.
The net primary income deficit, which shows the difference between the current year’s fiscal deficit and interest payments on previous borrowings, rose by AU$7.7 billion to AU$14.3 billion in the September quarter. Meanwhile, the financial account deficit decreased by AU$2.5 billion in September quarter 2021.
Given these statistical figures, Australia’s net International Investment Position (IIP) was estimated at AU$860.9 billion at the quarter. This reflects a drop of AU$38.3 billion on the revised June quarter position. The observed decline in IIP could be attributed to the tightening supply of goods and services due to various global factors.
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Strong fuel prices
According to the ABS, much of the increase in trade surplus can be credited to the soaring prices of coal and other fuels. Meanwhile, greater agricultural exports aided the rise in surplus.
The observed rise in the income deficit emerged after the income flows to non-residents increased. Moreover, increased operating profits and strong dividend payments by non-financial sector institutions were behind this observed income hike to Australians abroad.
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On the import front, volumes fell due to supply chain constraints. Moreover, with news of the Omicron outbreak, a further slowdown can be expected globally. Similar concerns have emerged domestically where the weekly ANZ-Roy Morgan consumer confidence recently declined by 1.3 per cent, possibly hinting at rising pressures surrounding the cost of living experienced by Aussies.
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While major economic indicators have shown significant improvement across Australia over recent months, experts continue to remain sceptical about the impact of global events on the ongoing national recovery. New cases of the Omicron variant in Australia have led to the country pushing back its international border reopening, which was slated for December 1. Therefore, the coming fortnight would be crucial in examining how Australia grapples with this new threat.
