Australia’s GDP predicted to beat RBA’s forecasts

Chickpea sales to India have given the Australian economy an unlikely boost, according to the latest current account figures.

The Australian economy is predicted to have grown faster in the December quarter, off the back of a temporary tariff removal on chickpeas, new figures show.

Stats released by the Australian Bureau of Statistics on Tuesday shows Australia’s current account balance rose by $1.3bn in December quarter 2024, to a deficit of $12.5bn.

A boost in chickpea sales has helped grow the Australian economy. Picture: NewsWire / Nicholas Eagar

On an annual basis Australia account deficit is $52.4bn in 2024, the biggest since 2016.

Despite the massive account deficit, Australia’s net exports soared on the back of temporary tariff agreements with India which saw chickpea sales rise and stronger than expected commodity prices.

Overall, exports of goods rose 2.9 per cent in the December quarter 2024, after falling 2.3 per cent in the September quarter, led by rises in exports of rural goods.

Higher metal ores and minerals prices also contributed to export growth, including rises for iron ore and aluminium oxide (alumina).

Aluminium will face 25 per cent tariffs from the US President Donald Trump, scheduled to start from March 12.

Exports of services were also up 4.6 per cent driven by rises in intellectual property services related to pharmaceuticals and computer software.

Overall Australia’s GDP is now predicted to come in above the RBA’s forecasts Picture Zoe Phillips

Imports of goods rose 1.5 per cent, driven by non-industrial transport equipment, with a rise in electric vehicle imports.

Processed industrial supplies also rose, with increases in fertiliser imports

Following the ABS data, NAB has revised up its December quarter GDP forecast to 0.7 per cent on-quarter “with upside risk” after previously forecasting 0.5 per cent.

“Net exports are set to contribute 0.2 percentage points to Q4 GDP, which is a much stronger contribution than the -0.1 that we and the consensus had expected,” says NAB head of market economics, Tapas Strickland.

“While net goods exports were largely in line with our expectations, net services exports were stronger.”

NAB now is saying annual year-on-year growth will be 1.4 per cent, which is 0.3 per cent higher than the RBA’s forecasts of 1.1 per cent growth during February Statement on Monetary Policy.

CBA senior economist Belinda Allen said today’s results surprised to the upside, adding to Australia’s GDP.

“The big surprise in the numbers today was the net export contribution to GDP. Against CBA and market expectations for a negative contribution, net exports will contribute a positive 0.2 percentage points for the fourth quarter,” she said.

“We estimate the GDP deflator rose by 0.8 per cent quarter in Q4 24, as a solid lift in the terms of trade is partly offset by more modest domestic price pressures.

She said CBA now predicts nominal GDP growth of 1.5 per cent for the quarter.

Originally published as Australia’s GDP predicted to beat RBA’s forecasts