An unexpected boost in exports in the three months to June has prompted economists to lift their forecasts for economic growth in the quarter.
The deficit on goods and services narrowed by $1.36 billion, or 87 per cent, in the June quarter, seasonally adjusted figures from the Australian Bureau of Statistics showed.
In real terms, export volumes rose 2.7 per cent, boosted by higher volumes for iron ore and LNG and other non-rural goods, while import volumes were up by 1.4 per cent.
As a result, international trade will contribute 0.3 percentage points to June quarter economic growth, the Australian Bureau of Statistics said, a stronger contribution than economists had expected.
Gross domestic product growth for the quarter is now likely to beat previous market expectations of around 0.7 per cent, with forecasts now ranging from 0.7 per cent to 1.2 per cent.
The GDP data will be released on Wednesday.
"Australia's June quarter net trade and real government spending numbers were firmer than expected and, on balance, offset yesterday's weaker inventory data," JP Morgan economist Tom Kennedy said.
JP Morgan has lifted its forecast for GDP growth by one-tenth to 0.6 per cent.
The growth in export volumes came despite a fall in commodity prices, which contributed to a higher-than-expected widening of the current account deficit, to $9.6 billion in the June quarter.
That deterioration reflected a number of known culprits, said RBC Capital Markets chief economist Su-Lin Ong.
"Some impact from the Queensland cyclone early in the quarter coupled with a fall in key commodity prices after considerable strength in Q1 drove the rise in the deficit," Ms Ong said.
Commodity exports were heavily impacted by Cyclone Debbie in late-March, which caused temporary production stoppages at several Queensland mines and widespread damage to rail lines.
The terms of trade on goods and services - the prices of exports relative to the prices of imports - fell six per cent in the June quarter.
Economists expect net exports will continue to support growth in the second half of 2017 as major LNG plants currently under construction are completed and export output ramps up.
A recovery in commodity prices in recent months is also likely to help boost growth.
The data boosted the Australian dollar to a high of 79.83 US cents, up from its level of 79.52 US cents prior to the release of the numbers, but the local currency later eased after the Reserve Bank of Australia held the cash rate at 1.5 per cent and repeated its concern that an appreciating Australian dollar could slow economic growth.
