Net exports takes large 1.7 ppt off Q1 GDP
But govt spending and inventories boost growth
Makes for uncertainty over GDP data on Wednesday

SYDNEY, May 31 Reuters A surge in Australia39;s imports in the first quarter and surprising strength in government spending and inventories have added to uncertainty over this week39;s reading on gross domestic product GDP.

The current account surplus shrank unexpectedly, data showed on Tuesday, as the jump in imports took a chunk out of economic growth, although that was balanced by the strength in government spending.

The opposing forces complicated forecasts for Wednesday39;s GDP, which had been expected to show growth of 0.7 for the quarter and 3.0 for the year.

Both would be a slowdown from the previous quarter when reopening from coronavirus lockdowns unleashed a boom in activity.

A raft of data from the Australian Bureau of Statistics out showed Australia39;s current account surplus shrank to A7.5 billion 5.38 billion in the March quarter, well short of forecasts of A13.4 billion.

Part of the pullback was due to a 12 jump in imports, particularly cars, while companies also paid out fatter dividends to offshore investors.

As a result, net exports will subtract 1.7 percentage points from GDP, above forecasts for a 1.4 percentage point drag.

However, that was offset by a 2.5 jump in government spending which will add 0.7 percentage points to growth.

Private inventories also topped forecasts as firms looked to build…