Australia’s current account deficit of $1.6 billion in November, 1992, announced yesterday put an end to hopes for a fall in interest rates.
The figure was issued by the Australian Bureau of Statistics. The Acting Treasurer, Bob Collins, said: “”In light of this, and economic circumstances more generally, the Government has no plans to change current monetary-policy settings.”
The Opposition said Australia was drifting alarmingly.
It is at least the 50th consecutive month of negative figures. Annually, Australia has had 12 consecutive years of running up international debt. Australia is now among the top five debtor nations in the world in absolute terms _ higher than Russia or Argentina. Australia’s net overseas debt is approaching $170 billion.
The bureau said the amount of the deficit had fallen from $2 billion in October, 1992, a fall of 8 per cent. Exports had risen by 9 per cent and merchandise imports rose 3 per cent.
The deficit came in at the lower end of market forecasts. The dollar rose immediately after the figures to 67.94 cents after being at a five-year low of 67.70 cents a short time before the figures came out.
Senator Collins said the 9 per cent rise in merchandise exports reflected strong growth across a range of export categories. The import of North-West Shelf equipment valued at $240 and an OPTUS satellite influenced the import figure. Without them, imports would have fallen.
He made a comment similar to those made in other months by the Treasurer, John Dawkins: “”The monthly balance of payments results are subject to a large degree of volatility.”
He said that over time “”Australia’s improved competitive position will also feed through to further improvements in our export performance.”
The shadow treasurer, Peter Reith, said the figure was a disgrace. “”Australia is drifting alarmingly,” he said. Although the November against October figure was an improvement the longer term trend figure showed a 4 per cent deterioration. It was the 10 consecutive rise in the trend figure. Australia had “”a major, continuing, chronic problem”.
The Prime Minister, Paul Keating, had engineered the recession to deal with the foreign debt problem with high interest rates, but despite all the pain the problem continued. The Australian economy needed major structural change. Imports would continue at a high rate while structural conditions in Australia made the goods too expensive to produce here, he said.
The bureau said that in November rural exports were up 11 per cent. Dairy and wheat and wool were up, but sugar was down. Non-rural exports were up 4 per cent. Machinery was up 36 per cent (the largest contributor being telecommunications equipment). Oil and gold were up. Metals and minerals were down.
This financial year Australia’s current account was 35 per cent worse than at the same time the previous financial year ($8480 million compared to $6277 million). Nearly all of that could be accounted for by a fall in performance of merchandise trade.
Other figures show that Australia’s foreign debt is now 42 per cent of annual gross domestic product.
The figures show a reversal of last year’s trend which had Australia’s merchandise exports higher than imports, with capital and services causing an overall deficit.
Now merchandise, too, is show its third straight month of deficit. At the same time last financial year merchandise was $908 million in the black. This financial year it is $1116 in the red, a turnaround for the worse of $2024 million.
In February, 1991, confronted with a similar increase in imports but better merchandise figures, Paul Keating, then Treasurer, said, Australia had an “”exportable surplus”. He said the upward trend in imports would not continue indefinitely.
“”We won’t go on importing as we have this month. ,” he said then. “”So the general impact of policy on imports is obviously working.”
The bureau’s explanatory notes said monthly figures were less reliable that quarterly or annual ones and care should be exercised in comparing month-to-month figures.