Australia's current account deficit narrowed by 12 per cent in the third quarter, seasonally adjusted, increasing the chances that economic growth in the three months to the end of September will at least match forecasts of around 0.7 per cent.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
The Australian Bureau of Statistics (ABS) said on Tuesday that the deficit on goods, services and capital narrowed by $2.4 billion to $18.1 billion in the September quarter.
Within this, exports of goods and services rose $3.8 billion, or 5 per cent, compared with the June quarter, while imports rose just $307 million. Export volume increases were led by iron ore, coal and other minerals.
This quarterly improvement in the trade position is likely to contribute 1.5 percentage points to gross domestic product expansion in the three months, helping to offset a sharp drop in business and public sector investment.
Economists expected a lower, 1.2 point contribution, and the Australian dollar hopped from around US72.32¢ to US72.39¢.
Public sector demand, however, remained weak, and could put a drag on the final national accounts, released on Wednesday.
The ABS said final government consumption rose just 0.7 per cent compared with the June quarter, while gross fixed capital formation shrunk by 9 per cent.
The sharp decline followed a much worse-than-expected contraction in private sector capital expenditure, of 9 per cent, according to a release last week by the ABS.
Perpetual Investment's head of investment strategy Mathew Sherwood said the latest data underlined the resilience of the Australian economy despite the dramatic fall-off in both private and public expenditure.
"The positive GDP growth we are going to get on Wednesday will reflect trade," he said.
"You've got some pretty solid growth as well from the consumer; those two factors, along with housing, are really offsetting what is a major decline in mining investment, in non-mining investment and public investment."
Capital Economics' chief economist for Australia Paul Dales said net trade appeared "to have saved the Australian economy from contracting in the third quarter".