Spending boom in Australia takes its toll

By Greg Ansley

CANBERRA - Australia's booming domestic economy pushed the nation's current account deficit to a record $A9.356 billion in the June quarter as exports continued to struggle in the wake of the Asian crisis.

The seasonally-adjusted figure released yesterday by the Australian Bureau of Statistics took the deficit to more than 6 per cent of gross domestic product, a level earlier predicted both by Treasurer Peter Costello and market analysts.

The deficit was also within market expectations, cooling pressure on the aussie after an early dip yesterday morning ahead of the release of the balance of payments data.

The $A closed at 0.6335USc, close to Friday's range.

Treasurer Peter Costello said the annual rate for the current account deficit remained in line with budget forcasts.

"While the Government believes this quarter and the next quarter to be peaks in the current account deficit, we expect the position to improve as Asia picks up during the course of the next year and as the world economy generally picks up," he said.

Yesterday's figures showed a $1.1 billion - 13 per cent - widening of the June quarter deficit, pushed by falling export prices and rising imports.

The deficit on goods and services rose by $727 million to $4.72 billion, with exports tumbling by 2.9 per cent to $26.6 billion against imports worth $31.3 billion.

Sales of all rural goods - except wool and sheepskins - fell, shaving $325 million off the sector's performance compared with the March quarter.

A 3 per cent rise in the value of wool and sheepskin exports came as rising export volumes more than offset a slight price decline.

The largest falls in exports of non-rural goods were a $220 million slide in coal, coke and briquettes and a $202 million fall in metal ores and minerals, both reflecting substantial prices falls.

The seasonally-adjusted services deficit fell slightly to $440 million.