Australia’s current account deficit likely to widen in Q1

Australia's current account deficit is expected to widen by $1.0bn to $10.6bn in Q1. That partially reverses a $2.5bn improvement in Q4.

The trade deficit was $3.7bn in the opening quarter of 2015, widening from a $2.4bn deficit in Q4 (revised to -$2.7bn). The import bill rose by 3.0% in the period, outstripping a 1.9% rise in export earnings.

On the trade front, weakness was centred on export prices, dented by a further fall in global commodity prices. The terms of trade declined by an estimated 1.2% in the quarter.

The income deficit is expected to narrow a little, moderating to a forecast -$6.9bn from -$7.2bn in Q4, thereby extending the recent trend improvement.