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Australia racks up Q4 current account surplus but virus uncertainty weighs

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A fall in prices for Australia's top resource exports - coal and iron ore - weighed on the quarterly outcome while services export declined to be in deficit of A$261 million.

[SYDNEY] Australia boasted another current account surplus last quarter, helped by robust resource exports to Asia, though the outlook is uncertain as a rapidly spreading coronavirus epidemic threatens to impede trade and economic output.

Data on Tuesday showed the current account surplus came in around A$1 billion (S$909 million) from a downwardly revised A$6.5 billion in the three months to September and compared with forecasts for a A$2.3 billion gain.

A fall in prices for Australia's top resource exports - coal and iron ore - weighed on the quarterly outcome while services export declined to be in deficit of A$261 million.

Australia's tourism, transport and hospitality sectors have been jolted by a travel ban on China since the start of February as a preventive measure against the coronavirus.

The epidemic that began in China - Australia's No.1 trading partner - is having an outsized impact Down Under with the travel ban having spillover effects on overall spending.

Worryingly, a measure of Australian consumer confidence skidded to 5-1/2 year lows last week as fears of a pandemic sparked a huge sell-off in stock markets and badly shook the economic outlook.

In response to the market carnage, Australian policymakers held an emergency call on Monday, looking to dodge the risk of a recession.

Financial futures are betting the Reserve Bank of Australia (RBA) will step in by cutting its cash rate for the first time this year from an already record low of 0.75 per cent.

Economists have also swung with as many as 17 of 40 surveyed now predicting a cut compared with just two respondents calling for an easing last week.

The bank will release its rate decision at 0330 GMT on Tuesday.

Data on Wednesday is expected to show the economy expanded by a pedestrian 0.4 per cent in the December quarter, with exports likely to add 0.1 percentage point to overall growth.

Annual economic growth is forecast to pick up to 2 per cent.

REUTERS