Australia: Terms of trade jumps +2.8% in Q1 - TDS

Analysts at TDS point out that Australia’s Q1 terms of trade jumps +2.8%/q (more or less as expected) with export prices +4.9%/q and import prices +2.1%/q.

Key Quotes

“Our Q1 tracking suggests that the current account deficit shrinks back to -2.5% of GDP, while net exports are neutral to slightly positive for Q1 GDP growth. We will firm up our projections after the 3 May March trade report is released. Also, APRA is dropping the 10% loan growth cap for investors from 1 July, potentially putting a floor under soggy Sydney house prices if foot traffic picks up again.”

“Finally, with the 2018/19 Budget next month, more disappointing news where the pop in revenues is going to be frittered away and more - latest is the hint that the proposed hike in the medicare levy be dropped.”