Deteriorating current account balance not a positive sign (Lone Ranger)

The latest Balance of Payments numbers are out from the ABS and they do not tell a pretty story. The current account balance on goods and services (exports less imports) has deteriorated markedly in recent months. In of itself this is hardly a surprise, as Australia has generally had a services and goods trade deficit for decades.

Of most interest is the balance of trade for goods, which deteriorated from surpluses in the Dec '08 quarter ($3.2 billion) and Mar '09 quarter ($4 billion) to a deficit in the Jun '09 quarter (-$633 million). This is a concern because while our imports have decreased slightly from $64 billion in the Dec '08 quarter to $48 billion in the Jun '09 quarter, the value of goods exports have collapsed from $67 billion to $47 billion in the same period. While volumes have not much changed (yet), export prices for coal and minerals are way down, and this at a time where China has been stockpiling and, if anything, fuelling demand.

This begs the question - is Australia likely to have a "recovery" at a time of falling commodity prices and, potentially, export volumes if demand remains weak? These statistics are not those of an economy poised for growth and we should be alarmed about what is says about the state of our key export markets. The fun may be just beginning.