Within today’s data dump of balance of payments data that feed into tomorrow’s national accounts release for March was the important news that Australia’s terms-of-trade has fallen another 2.9% (seasonally adjusted) and 1.9% (trend) over the quarter to be down by 11.1% (seasonally adjusted) and 10.8% (trend) over the year (see next chart).
As you can see, we are only a smidgen above the GFC low with much further still to fall. And since the terms-of-trade measures the price received for Australia’s exports relative to the price paid for imports, the sharp fall in the terms-of-trade suggests that national disposable income (NDI) will register another decline in the March quarter, continuing the trend in place since late-2011 (see next chart).
