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Current account deteriotation

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The current account deficit deteriorated sharply in March.

After several months of improvement, the current account deficit jumped back to just under a billion dollars in seasonally adjusted terms.

The $938 million deficit for March was at the upper end of market expectations and, as a result, disappointing for the government.

The deterioration in the current account deficit in March raises questions about the staying power of the trend improvement in the balance of payments over the longer term.

Monthly figures are volatile, but the government would have to be concerned about a 10 per cent fall in the merchandise trade surplus (seasonally adjusted).

It is worth noting that the 2 per cent increase in merchandise exports in seasonally adjusted terms was outstripped by a 3 per cent increase in merchandise imports.

Meanwhile, on another front, the 7 per cent (seasonally adjusted) increase in housing approvals is encouraging news for the building sector.

The rise in building approvals for March is the third such increase in the last four months, and backs up anecdotal evidence that there has been a pick up in building activity.

But the increased activity in the building sector is not being reflected across a broad front in the economy.

There is no quick fix.

The only way to achieve a sustainable recovery that will create jobs and help Australia pay its way in the world is through fundamental reform - the wide ranging reform outlined in "Fightback!".

4 May 1992 Canberra


Contact: David Turnbull (06) 2774277 D68/92