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Australia's current account deficit widened to $27.1 billion in the March quarter 2026, with the balance on goods and services falling into deficit for the first time since the December quarter 2017 as cyclone-hit mining exports, surging imports of artificial intelligence infrastructure and rising fuel costs combined to deliver a sharp deterioration in the nation's external position.
Australian Bureau of Statistics data released today shows exports of goods and services fell 1.2 per cent in the quarter while imports rose 0.8 per cent, producing a net trade deficit that is expected to detract 0.8 percentage points from March quarter GDP growth - the largest such drag since June 2016.
The $5.2 billion fall in net trade was driven by a confluence of factors rarely seen in a single quarter.
Cyclones disrupted iron ore and coal shipments from Western Australia and Queensland, dragging down the value of mineral commodity exports in an already weakening sector.
At the same time, imports of automatic data processing (ADP) equipment spiked 204.4 per cent month-on-month in March alone, while fuels and lubricants imports surged 53.6 per cent in March.
"Iron ore prices fell strongly, while both iron ore and coal exports were disrupted by cyclones Koji and Mitchell," says ABS head of international statistics Jonathon Khoo.
"ADP equipment imports reached historic highs, led by bulk imports of AI server racks amid continued data centre infrastructure investment in NSW and Victoria.
"Crude oil and refined petroleum product prices rose significantly as the closure of the Strait of Hormuz lifted oil prices and tightened global supply."
Monthly trade data for March 2026 underscored the severity of the shift, with Australia recording a goods deficit of $1.84 billion.
The ADP equipment import surge reflects the acceleration of hyperscale data centre construction across the eastern seaboard, a trend that has intensified as global technology companies race to build AI compute capacity in Australia.
Non-monetary gold exports provided a partial offset, jumping 23.7 per cent in the quarter, but were insufficient to prevent the broader trade balance from tipping into the red.
Australia's net primary income deficit widened to $23.7 billion, driven by higher profits flowing to foreign-owned mining companies operating in Australia.
The widening primary income gap compounded the trade deterioration and pushed the current account deficit's share of nominal GDP to what the ABS flagged as its expected highest level since June 2016.
The nation's net international investment liability position rose $62.3 billion to $707.6 billion, a high of more than two years.
"Volatility in overseas equity markets and exchange rate movements due to the Middle East conflict reduced the value of Australian superannuation investment in overseas equity," says Khoo.
"This, combined with strong demand by overseas investors for Australian debt, drove Australia’s international investment position to its highest liability level since December 2023."
Separate ABS Business Indicators data for the March quarter painted a similarly subdued picture of the domestic economy.
Company gross operating profits fell 1.3 per cent, led by a 9.1 per cent decline in mining sector profits. Wages and salaries rose 1.2 per cent, while inventories edged up 0.5 per cent.
The combination of falling mining profits and a widening current account deficit sets an unfavourable backdrop ahead of the March quarter national accounts due for release tomorrow.
The $5.2 billion net trade detraction of 0.8 percentage points from GDP represents one of the largest external drags on growth in nearly a decade, and will need to be offset by domestic demand if the economy is to avoid a sharp slowdown in headline growth.
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