(Australian Associated Press)
Economists have upgraded their economic growth forecasts after a rise in exports helped narrow Australia’s current account deficit by more than $4 billion in the March quarter.
The current account deficit shrunk to $10.47 billion in the three months to March, from the December quarter’s deficit of $14.02 billion, seasonally adjusted figures from the Australian Bureau of Statistics show.
The balance on goods and services returned to a surplus of $4.08 billion as exports rose seven per cent, including strong growth for liquefied natural gas, while imports rose two per cent.
National Australia Bank economist Kaixin Owyong said stronger exports and solid growth in government spending had prompted the bank to improve its forecast for March quarter gross domestic product, due to be released on Wednesday.
NAB now expects quarterly GDP growth of one per cent, up from its previous estimate of 0.8 per cent, for an annual growth rate of 2.9 per cent.
Mr Owyong said this week’s economic data, including profits and inventories in Monday’s business indicators, had proved better than expected.
Westpac has upgraded its economic growth forecast to 1.1 per cent for the quarter and 3.0 per cent for the year, with senior economist Andrew Hanlan saying above trend growth in public demand reflected rising investment and spending on health.
“In short, the public sector is a key growth engine at present, with positive spill-over effects to the private sector,” Mr Hanlan said.
UBS has also lifted its GDP forecasts, to growth of 0.9 per cent in the quarter for an annual rate of 2.8 per cent, due to a larger than expected contribution from rising public demand and exports.