Australia’s trade position has boomed during the Covid-19 pandemic but it will not stop the country posting its first recession in 29 years.
The nation’s current account trade surplus ballooned to $17.7bn in the June quarter, compared with $9bn in the previous three months, Australian Bureau of Statistics data released on Tuesday shows.
Net exports are expected to add 1 percentage point to economic growth in the quarter.
The June quarter national accounts are due for release on Wednesday.
However, economists’ forecasts still centre on an economic contraction of about 6% during the June quarter.
It will mark the biggest decline since the ABS started plotting the national accounts in the late 1950s.
This sharp fall follows a more modest 0.3% decline in the March quarter but will constitute a technical recession – two consecutive quarters of contraction.
The expected confirmation of a recession was blamed for a decline in consumer confidence in the past week.
The weekly ANZ-Roy Morgan consumer confidence index – a pointer to future household spending – fell 2.7%, ending two weeks of gains.
But ANZ’s head of Australian economics, David Plank, is encouraged to see confidence in Victoria bucking the trend.
“The continued drop in new Covid-19 cases in Melbourne may be giving hope that the severity of the lockdown can be eased as planned,†Plank said, releasing the survey on Tuesday.
While Victorians may be in a better mood, separate data shows the state’s house prices remain in decline and its manufacturers are proving a drag on the sector’s national recovery.
The national CoreLogic home value index fell 0.4% in August, with Melbourne prices falling 1.2%.
CoreLogic said housing values had continued to trend lower from their pre-Covid-19 highs on a national basis, but the rate of decline had eased in the past two months and five of eight capital cities were now recording steady or rising values.
The Australian Industry Group performance of manufacturing index also fell by 4.2% to 49.3 points in August, just below the 50-point mark that separates a contraction in activity from an expansion.
Victoria’s index fell 9.3 points to 44 but NSW and South Australian remained in expansion territory and Queensland improved.
“Manufacturers from Victoria, which accounts for about 25% of the national economy, sunk back into negative territory in the month in line with the introduction of severe restrictions on businesses,†Ai Group’s chief executive, Innes Willox, said.
The Reserve Bank is widely expected to keep the cash rate at a record low after its monthly board meeting on Tuesday.
The RBA cut the cash rate to 0.25% in March, when it also introduced a bond-buying program to pump liquidity into the financial system while keeping market interest rates low.