A larger-than-expected current account deficit in Q1 may drag Australia’s GDP growth, offsetting modest gains in business inventories.
Australia’s current account deficit ballooned to A$27.1 billion in the first quarter, up from A$21.1 billion in the prior period, exceeding expectations and signaling a drag on GDP. The net exports contribution to GDP fell to -0.8%, worsening from -0.1% in the previous quarter.
Business inventories rose 0.5% quarter-on-quarter, recovering from a 0.1% decline, while company gross profits slumped 1.3% after a 5.8% gain. Building permits also softened, with monthly approvals down 3.4% and private house approvals dipping 1.0%.
The data follows recent hawkish signals from the Reserve Bank of Australia, including hints of a potential rate hike, as inflation concerns persist.