Within today’s dump of balance of payments data that feeds into tomorrow’s December quarter national accounts release was the important news that Australia’s terms-of-trade slumped 5.3% in seasonally adjusted terms and by 1.9% in trends terms:
Over the year, the terms-of-trade fell by 0.6% in seasonally adjusted terms but rose by 1.6% in trend terms.
Since the terms-of-trade measures the prices received for Australia’s exports relative to the prices paid for imports, this terms-of-trade result will lower both national disposable income (NDI):
As well as nominal GDP:
We expect this to continue into future quarters as the recent commodity boom subsides and national income growth recouples with GDP growth.