Australia’s December imports likely declined while exports likely grew

Australia's preliminary official data for goods imports showed that that dropped for the second consecutive month in December and at a markedly faster rate than in November. The services imports is also expected to have slowed, most markedly via reduced tourism abroad. Weaker imports do not imply a sign of declining momentum in Australia's domestic demand, but an indication of the rapidly declining investment resource boom.

Meanwhile, exports of goods and services are likely to have grown modestly, despite a sharp fall in commodity prices in December. As new capacity comes online, exports of commodity are expected to grow further. Moreover, the strong growth in inbound tourism is expected to have been sustained.

"If our export and import forecasts are about right, and barring serious revisions to Oct./Nov. data, Q4 export growth would come to something like -1% qoq, while import growth would be positive at around 0.8%", says Societe Generale.

However, real export growth is expected at around 4.5% and is likely to have surpassed real import growth of about 1%. This will imply a net export contribution of 0.5-0.75pp to quarterly GDP growth.