The ABS preliminary estimates of the Australia’s September quarter trade deficit and terms of trade were published indicating a recovery in Australia’s export earnings and prices received. The trade deficit narrowed to $7.5 billion, down from the revised June quarter deficit of $10.5 billion (initially a $9.6 billion deficit).
Westpac economist, Andrew Hanlan, said the most interesting part of the report was the narrowing of the trade deficit in the third quarter on a rebound in exports, which was the result of a lower exchange rate and higher export volumes.
Higher import prices which resulted from the lower exchange rate were largely offset by a fall in volumes, although the net effect was a 1% rise in the value terms. However, in some bright news, Commonwealth Bank said the low exchange rate had “continued to support [the] tourism industry.”
Westpac will revise third quarter GDP estimates up as a result for the figures, but their full year estimate will remained unchanged because of the downwards revisions to the June quarter deficit.