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SYDNEY, Sept 5 (Reuters) – Australia’s export volumes soared in the June quarter as foreign visitors flocked to the country, data showed on Tuesday. This offset weakness in private consumption and gave economic growth a much-needed boost.
The expenses of tourists and foreign students are considered as service exports.
Other figures showed that the government also made large infrastructure spending this quarter, significantly reducing the risk of a negative reading for gross domestic product (GDP).
Data from the Australian Bureau of Statistics showed that net export volume boosted GDP by 0.8 percentage points in the second quarter, more than double analysts’ expectations.
Government spending added a further 0.5 percentage point to growth, while most analysts had expected a flat result.
Taken together, this should more than offset the sharp 1.0 percentage point decline in inventories.
“Services export volumes rose a remarkable 12.1%, buoyed by increased student and tourist flows,” said Sean Langcake, head of macroeconomic forecasting at Oxford Economics Australia.
The ABS noted that the number of international students in Australia had finally returned to pre-pandemic levels in the quarter.
“This should ensure that Q2 GDP growth will be positive despite mounting headwinds for domestic demand,” Langcake said.
Household consumption was dampened by high inflation and rising borrowing costs. In a bid to curb inflation, the Reserve Bank of Australia (RBA) raised interest rates to a decade-high of 4.1% in June.
The tightening is showing some impact: monthly consumer price inflation slowed to a lower-than-expected 4.9% in July, moving away from a year-ago peak of 8.4%.
The RBA holds its September monetary policy meeting on Tuesday and is widely expected to keep interest rates unchanged for a third month but warns that another hike may still be needed.
Tuesday’s data also showed that Australia’s nominal current account surplus narrowed to A$7.7 billion ($4.96 billion) in the June quarter as prices of many of the country’s commodity exports fell.
The terms of trade, which measure the ratio of export to import prices, fell 7.9% in the quarter, the sharpest decline since mid-2009.
($1 = 1.5518 Australian dollars)
Reporting by Wayne Cole; Edited by Jacqueline Wong and Edwina Gibbs
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