Australia Records First Trade Deficit Since 2017 Amid Soaring Imports

Australia has recorded its first trade deficit in goods and services since the December Quarter 2017 during the March Quarter 2026. This significant economic shift is highlighted by a current account deficit that widened to A$27.1 billion in the first quarter of 2026, representing a substantial increase from the revised A$23.0 billion deficit recorded in the December Quarter 2025. This transition marks an end to a prolonged period of consistent trade surpluses that have supported the domestic economy for nearly a decade.

The widening deficit reflects a combination of surging imports driven by high domestic demand for technology infrastructure and elevated global energy costs, alongside a parallel decline in key resource exports. Data released on June 2, 2026 confirms the details of this trade contraction, which is expected to have immediate consequences for broader economic growth calculations.

Technology and Energy Costs Drive Import Expansion

Imports of goods and services grew by 0.8 percent during the March Quarter 2026. This expansion was heavily driven by unprecedented demand for data centre infrastructure, as organisations across the country accelerate their technological capabilities. Imports of automatic data processing (ADP) equipment, which includes AI Server Racks destined for major enterprise data centre projects in New South Wales and Victoria, grew by 75 percent to reach a total value of almost A$8 billion for the quarter.

Simultaneously, the cost of importing energy products rose sharply due to global geopolitical disruptions. The ongoing closure of the Strait of Hormuz has forced a steep rise in global oil and refined petroleum pricing, impacting domestic fuel import bills. Import prices for petroleum and petroleum products surged by 9.8 percent during the March Quarter 2026, further compounding the import bill. This combination of heavy machinery procurement and high fuel costs culminated in a specific goods trade deficit of A$1.84 billion in March 2026 alone.

Export Declines and Commodity Pressures

In contrast to the rising import bill, Australia's export sectors faced a broad contraction. Total exports of goods and services fell by 1.2 percent during the March Quarter 2026. This decline was led by a weakening in the nation's traditionally robust resource sector, with exports of primary Mining Commodities—specifically iron ore and coal—falling during the period. The export drop was caused by a combination of softer global commodity prices and localised supply chain disruptions, including production and transport delays caused by cyclones Koji and Mitchell.