Net exports likely to have contributed positively to Australia's GDP growth

Australia's foreign trade data as of now indicate a substantial widening of the trade deficit in Q4 to AUD9.5bn from 7.5bn in Q3. Nevertheless, despite the wider deficit, net exports are expected to have again contributed positively to GDP growth.

Data showed that nominal exports declined by 3.2% q/q in Q4, notably more than the 0.7% q/q decline in imports. However, applying the official export and import price indices of -5.4% and -0.3%, respectively, shows an increase in real exports of 2.2% and a decline in imports of 0.4%. This points to a net contribution to quarterly GDP growth, an important support to overall growth.

"If our forecast for the net export contribution of 0.5pp is about right, GDP should have ended 2015 on a solid note with growth just fractionally below the trend."