Australian Bureau of Statistics
1360.0 - Measuring Australia's Economy, 2003
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 03/02/2003
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The balance on the financial account, in original terms, changes markedly from quarter to quarter. This volatility reflects, in part, the huge gross flows which underlie the balance on financial account and the difficulties associated with recording them in the correct time period. This in turn, is reflected in the volatility and size of the net errors and omissions item. As Australia usually has a current account deficit, the balance on the financial account usually records a surplus (or net inflow).
The financial account provides information on transactions in Australia’s foreign financial assets and liabilities, such as equity investments, bonds and other debt securities, and loans and other liabilities such as trade credit.
Credit entries in the financial account are net inflows, resulting from a reduction in Australian investment abroad and/or an increase in foreign investment in Australia. Debit entries are net outflows. As in the current and capital accounts, credit entries are shown without sign while debit entries have a negative sign.
A positive financial account balance (a net inflow) occurs when the increase in Australia’s liabilities to foreign countries (or the reduction in claims on foreign countries) in a period exceeds the increase in Australia’s claims on foreign countries (or the reduction in liabilities to foreign countries). A net financial inflow occurs when a country has a deficit on its combined current and capital accounts. In other words, to finance the current account deficit it draws on savings from the rest of the world.
A negative financial account balance (a net outflow) occurs when the increase in Australia’s claims on foreign countries (or the reduction in liabilities to foreign countries) in a period exceeds the increase in its liabilities to foreign countries (or the reduction in claims on foreign countries). In principle, such a net financial outflow occurs when a country has a surplus on its combined current and capital accounts. In other words, the net outflow for countries with such a surplus represents the extent to which they provide their domestic savings to finance deficits in the rest of the world.
This page last updated 20 January 2006
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