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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 highest ever quarterly net inflow was recorded in the September quarter 1999 ($11,445m). The June 2002 quarter recorded a financial account balance net inflow of $8,008m.





BALANCE OF PAYMENTS, FINANCIAL ACCOUNT
Period
Balance on financial account

$m

ANNUAL
1996–1997
17,553
1997–1998
24,642
1998–1999
30,114
1999–2000
30,920
2000-2001
14,335
2001-2002
20,286

QUARTERLY
2000-2001
March
2,097
June
2,680
2001-2002
September
3,270
December
5,382
March
3,626
June
8,008

Source: Balance of Payments and International Investment Position, Australia (5302.0).


Explanatory Notes

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.

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