Forex Flash: Aus 1Q 2013 GDP likely lower on shrinking exports - NAB

Yesterday's 4Q GDP figure for Australia came exactly in line with expectations at +0.6%, and even a better one for the yearly figure at +3.1% when +3.0% was expected. But that data did not reflect latest 5% decline in coal exports, “most likely affected by Tropical Storm Oswald that hit Queensland in the last week of January and put the coal railway feeder lines to Gladstone under water,” David de Garis notes, Senior Economist Markets at the NAB. Today's Aus trade balance numbers showed a wider deficit than anticipated on weak exports.

David adds that “This will restrict exports to a greater extent in February, as will Cyclone Rusty that shut down Port Headland for a week or so. This will likely see the net exports contribution to GDP in the March quarter as much less friendly to growth than the 0.6% Q4 contribution, or even a negative, depending on how quickly coal exports ramp up and the trend step up in iron ore exports from underway expansion projects,” he reckons.

“Iron ore export volumes were also lower in January after an equally large jump in December,” the economist notes. “Iron ore prices were rising at the time so more than likely supply-side shipment effects at play,” he concludes, while Iron ore prices have recently fell below the 150 mark for first time in 1 month.