Australia recorded an $8.4 billion current account surplus in the March quarter 2020, the fourth in succession, as COVID-19 effects impacted international trade. The current account surplus was driven by a trade surplus of $19.2 billion and a narrowing of the net income deficit to $10.6 billion, according to the latest information released by the Australian Bureau of Statistics (ABS).
ABS Chief Economist Bruce Hockman said: “The impact of COVID-19 was evident across the Balance of Payments this quarter, with falls for imports and exports of both goods and services in volume terms”.
“Goods imports volumes decreased for March quarter across a broad range of consumption and intermediate goods as a result of February’s supply chain disruption in China. A slight rebound was seen in March led by computing equipment due to both the alleviation of some supply constraints and increased work and study from home activity.
Goods export volumes fell, driven by non-monetary gold and cyclone Damien disrupting iron ore exports. While the balance of services fell only modestly, the COVID-19 travel restrictions significantly drove down travel services volumes for both imports and exports. Travel services exports was spared further weakness as a substantial number of international students had arrived prior to border closures.
On the financial side, COVID-19 effects drove a surge in activity as investors sold off financial assets and sought liquidity from financial intermediaries. Australia’s financial position remained stable despite this heightened activity, as liabilities were effectively hedged against volatility in the foreign exchange market”.
Contribution to Gross Domestic Product
In seasonally adjusted chain volume terms, the balance on goods and services surplus increased $2.3 billion, widening the surplus to $10.9 billion, with an expected contribution of 0.5 percentage points to growth in the March quarter 2020 Gross Domestic Product.
International Investment Position
Australia’s net IIP liability position was $808.1 billion at 31 March 2020, a decrease of $101.4 billion on the revised 31 December 2019 position of $909.5 billion.
Australia’s net foreign debt liability position increased $3.8 billion to $1,146.3 billion. Australia’s net foreign equity asset position increased $105.3 billion to $338.3 billion at 31 March 2020.