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Australia’s weak export volumes in the first three months of this year are likely to reduce gross domestic product over this period, according to Capital Economics.
In the first quarter, the value of exports increased by 5.4% over the previous three months, and the value of imports increased by 3.4%, according to Capital data. However, when prices are excluded, the picture is quite different, as a 10.6% increase in export prices implies a drop in export volumes of almost 5%, which is taken into account when calculating GDP.
Alex Joyner, chief economist at IFM Investors in Melbourne, said the downside of the calculation involves subtracting 1.5 percentage points from quarterly real GDP growth.
“This means that despite continued growth in consumption and investment, we have recorded only tiny GDP growth,” said Marcel Thiliant, senior economist for Australia and New Zealand at Capital Economics, in a research note on Tuesday. “But with the Aussie rally running out of steam, import growth could slow while manufacturing exports should no longer be competitive.”
Australia’s economy has experienced a V-shaped boom, and its trading picture has been bolstered by a sharp jump in iron ore prices, which are close to record highs as producers struggle to keep up with demand from Chinese steel mills. Australia’s weakest quarters are often in the first three months of the year, and this trading data suggests a similar year 2021.
March data released on Tuesday showed that the value of exports fell 2% and the value of imports rose 4%, narrowing the country’s trade surplus to A $ 5.6 billion.