SYDNEY, Feb 1: Australia posted yesterday a hefty 12.4 Bir cent monthly drop in its ecember current account deficit, bolstering the fortunes of the government Just five days into an election campaign, economists said, reports AFP.

The Australian Bureau of Statistics said the current account deficit fell 230 million dollars to 1.628 billion Australian dollar (1.2 billion US dollars) seasonally adjusted from 1.858 billion dollars the previous month.

Average forecasts had been for a deficit of two billion dollars, and the better -than-expected result was good news for the labour government, which is lagging the conservative opposition in opinion polls ahead of the March 2 poll.

State Bank of New South Wales Chief Economists Hans Kunnen said that from a political perspective, the latest figures were very good news for the government.

He said the.deficit should continue to shrink until at least the middle of the year, when it could come under pressure from a stronger economy and consequently higher imports.

Bankers trust economist Rory Robertson agreed the figure was on a downward trend, saying the result "adds to the view that the recent improvement in the current account can continue."

But conservative opposition leader John Howard used the opportunity to slam the government for the near 800 per cent blow out In Australia's foreign debt to 180 billion dollars during the labour government'^ 13 year reign.

Howard rejected suggestions the latest balance of payments data was good news tor the Keating government.

"If you regard 1.6 billion dollars as good you've got to be joking," he told reporters.

Kunnen said the drop in the deficit was largely due to

a healthy rural sector, where exports rose 22.7 per cent in the month.

This figure, which contributed to a general 10.0 per cent rise in exports, swamped a 4.7 per cent rise in Imports.

Kunnen said the latest figures should be well received by bond and foreign exchange markets which have a dim view of high current account deficits.

The Australian stock exchange's main indicator, the all ordinaries index, rallied 1.0 per cent Wednesday, mostly thanks to the positive data, brokers said.

Treasurer Raplh Willis said the December figures confirmed a dramatic improvement In the current account deficit.

"This Improvement growth." he said.

Unemployment dropped sharply in December to a seasonally adjusted 8.1 per cent from 8.6 per cent in the previous month.

In data also released Wednesday, building approval figures for December fell 0.4 per cent from the previous month.

Economists had generally been expecting flat activity in the housing sector In view of the widespread slump in the industry which they expect to reach a tough and then pick up by mid-1997

But it was not all good news for the government Wednesday, with the an nouncement that interna tional ratings agency standard and poor s had raised neighbouring New Zealand's long-term foreign currency credit rating to AA plus from AA. putting it ahead of Australia for the first time