Key Facts
• On June 3, the Australian Bureau of Statistics reported a Q1 current account deficit of AUD 14.7 billion (USD 9.51 billion).
• The deficit narrowed from Q4 2024’s revised AUD 16.3 billion.
• Net exports are expected to reduce GDP by 0.1 percentage points, contrary to analysts’ zero-impact forecast.
• Government spending, previously a growth driver, is now slightly weighing on GDP.
• Inventory levels unexpectedly rose, providing a positive contribution to GDP.
• Analysts predict Q1 GDP growth of 0.4%, down from 0.6% in Q4 2024.
• Year-on-year GDP growth is expected to accelerate from 1.3% to 1.5%.
• Corporate investment remains weak, highlighting downside risks to the Australian economy.
• Oxford Economics’ lead economist Ben Udy noted that recent data, including soft retail sales and investment figures, suggest economic activity is slowing.
• Inventories were identified as one of the few positive factors for Q1 GDP.
Summary
Australia’s Q1 2025 current account deficit narrowed to AUD 14.7 billion, down from Q4 2024’s revised AUD 16.3 billion. However, net exports are projected to reduce GDP by 0.1 percentage points, contrary to analysts’ expectations of no impact. Government spending, once a growth driver, now slightly weighs on GDP, while unexpected inventory increases provide a positive contribution. Analysts forecast Q1 GDP growth at 0.4%, a slowdown from 0.6% in Q4 2024, with year-on-year growth accelerating to 1.5%. Weak corporate investment and soft retail sales highlight economic risks, with inventories being one of the few bright spots. Oxford Economics’ Ben Udy emphasized that recent data points to slowing economic activity.
