Seventh straight current account deficit for Australia

Australia’s current account balance rose by $1.3 billion in December quarter 2024 (seasonally adjusted, current prices), to a deficit of $12.5 billion, according to figures released today by the Australian Bureau of Statistics (ABS).

Tom Lay, ABS head of International Statistics, said: "The rise in Australia’s current account was led by the surplus on trade in goods and services increasing $3.7 billion to $7.5 billion. This was partly offset by the net primary income deficit, which widened by $2.3 billion to $19.8 billion.

“Australia recorded an annual current account deficit of $52.4 billion for the 2024 calendar year, the largest since 2016.”

Australia’s terms of trade rose 1.7 per cent from September quarter 2024, 4.8 per cent lower than December quarter 2023. Despite the annual fall, this was the first rise in the terms of trade since December 2023, driven by growth in export prices for iron ore and gold. 

Exports of goods rose 2.9 per cent in the December quarter 2024, after falling 2.3 per cent in the September quarter, led by rises in exports of Rural goods. Chickpea exports led this growth, as India temporarily lifted tariffs on chickpea imports. Higher Metal ores and minerals prices also contributed to export growth, including rises for iron ore and aluminium oxide (alumina). 

Exports of services were also up (4.6 per cent), led by Other services. This was driven by rises in intellectual property services related to pharmaceuticals and computer software. 

“Other personal travel also rose this quarter, with visitors from the United States of America driving the rise, with overseas travellers benefiting from the depreciation of the Australian dollar against the US dollar,” Mr Lay said.

Imports of goods rose 1.5 per cent, driven by Non-industrial transport equipment, with a rise in electric vehicle imports. Processed industrial supplies also rose, with increases in fertiliser imports. 

Imports of services fell 0.7 per cent from September quarter 2024, driven by Travel services. 

“The number of Australians travelling overseas remained high following elevated travel to Europe in the September quarter. In contrast, the December quarter saw Australians favouring destinations less expensive and closer to home.”

“Japan had a large increase in Australian visitors during the quarter, with favourable exchange rates playing a possible factor.”

The net primary income deficit rose by $2.3 billion (-$19.8 billion) in the December quarter 2024, following a $2.2 billion rise in primary income debits (outflows) and a $0.2 billion fall in primary income credits (inflows). 

The $2.2 billion rise in outflows followed higher debt liability interest paid as the number of Australian issued debt securities owned by non-residents grew over the recent quarter, as well as increased dividends paid by Australian firms to overseas investors. 

The small fall in inflows was due to weaker returns on Australian portfolio investment abroad.

The financial account had a surplus of $14.4 billion, driven by net inflows of debt (+$28.8 billion) and partly offset by net outflows of equity (-$14.4 billion). 

Australia's net international investment liability position narrowed by $61.6 billion to $653.2 billion, its lowest level since March quarter 2008. This was due to stronger growth in Australia's foreign assets (+$342.5 billion) than foreign liabilities (+$280.8 billion). 

“The depreciation in the Australian dollar saw the value of Australia’s investments overseas increase when measured in Australian dollars. This led to the largest net foreign equity asset position on record,” Mr Lay added.

Australia's net foreign equity asset position rose by $152.5 billion to $735.3 billion.

Australia’s net foreign debt liability position grew by $90.9 billion to $1,388.6 billion, reflecting the continued strength in overseas investors' acquisition of debt securities issued by Australian banks.

The $1.0 billion rise in net trade (seasonally adjusted, chain volume measure) is expected to add 0.2 percentage points to the December quarter 2024 Gross Domestic Product (GDP) movement.