Today’s release of the Balance of Payments shows a significant narrowing in the current account deficit in the September quarter to $9.7 billion, representing 3.3 per cent of June quarter nominal GDP. This is the lowest current account deficit (as a proportion of GDP) since the March quarter 2002.
The narrowing of the current account deficit was driven by a turnaround in the trade balance from a deficit in the June quarter to a surplus in the September quarter. This is the first quarterly trade surplus since the March quarter 2002. The trade surplus largely reflects the continued flow through of higher coal and iron ore contract prices.
Export volumes were flat in the September quarter, but remain 5.0 per cent higher through the year. Strong rises in non‑rural commodities and services exports rose in the quarter, were offset by falls in rural exports, elaborately transformed manufactures and other goods.
Import volumes rose by 1.6 per cent in the September quarter, to be 13.2 per cent higher through the year. The increase in imports was mainly driven by increases in capital goods.
The terms of trade rose by 5.6 per cent in the September quarter to be 20.6 per cent higher through the year as a result of higher commodity prices. Export prices rose by 10.2 per cent in the quarter.
Net foreign debt rose to $658.0 billion in the September quarter, representing 58.2 per cent of year‑ended June quarter 2008 nominal GDP. Australia’s debt servicing ratio – the percentage of export earnings required to meet Australia’s debt servicing repayments – fell in the September quarter to 10.9 per cent.
The Rudd Labor Government remains committed to strengthening our economy and lifting our productive capacity and international competitiveness to strengthen our export performance over the long term.