CANBERRA: Australia could be set to post its first current account surplus since the mid-1970s this year, as soaring commodity prices, rising export volumes and a narrower net income deficit work to push the balance into the black. On Tuesday, the Australian Bureau of Statistics will release fourth-quarter current account figures, which are expected to show a deficit – as has been the case during most of Australia’s history – but a much narrower one than in previous quarters.
According to economists at UBS, this expected marked narrowing of the deficit is expected to lay the groundwork for the country to report a rare surplus in early 2017. A current account surplus would likely give additional support to the Australian dollar, which has already risen strongly against a basket of currencies since the start of the year. “The current account is extremely significant to the dollar,” said Commonwealth Bank of Australia chief currency strategist Richard Grace. Countries or regions which run current accounts surpluses – like Japan, Switzerland or the eurozone – have far more expensive currencies than those who do not, low interest rates notwithstanding.
