5302.0 - Balance of Payments and International Investment Position, Australia, Dec 2013 
Quality Declaration
Quality Declaration ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 04/03/2014
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ANALYSIS AND COMMENTS
VOLUMES AND PRICES Goods and Services In seasonally adjusted chain volume terms, the balance on goods and services was a surplus of $10,753m, a rise of $2,505m (30%) on the September quarter 2013 surplus of $8,248m. The net surplus on goods rose $2,237m (22%) on the September quarter 2013 surplus of $10,147m. Goods credits rose $1,980m (3%) and goods debits fell $257m. The net deficit on services fell $268m (14%) on the September quarter 2013 deficit of $1,899m. The increase in the balance on goods and services surplus, in seasonally adjusted chain volume terms, is expected to contribute 0.6 percentage points to growth in the December quarter 2013 volume measure of GDP, assuming no significant revision to the GDP chain volume estimate for the September quarter 2013. Terms of Trade and Implicit Price Deflator Australia's seasonally adjusted terms of trade on net goods and services for the December quarter 2013 rose 0.6% to 88.1 with an increase of 0.8% in the implicit price deflator (IPD) for goods and services credits and an increase of 0.2% in the IPD for goods and services debits. In trend terms, the terms of trade for net goods and services fell 0.9% to 87.8. Goods The trend estimate of net goods at current prices for the December quarter 2013 was a surplus of $1,929m, a rise of $636m (49%) on the September quarter 2013 surplus of $1,293m. In seasonally adjusted terms at current prices, net goods was a surplus of $2,802m, a rise of $2,557m (1,044%) on the September quarter 2013 surplus of $245m.
Services
GOODS CREDITS The trend estimate of goods credits at current prices rose $1,915m (3%) to $68,800m in the December quarter 2013. In seasonally adjusted terms at current prices, goods credits rose $2,420m (4%) to $69,245m, with volumes up 3% and prices up 1%. Rural Goods Exports of rural goods, in seasonally adjusted terms at current prices, rose $82m (1%) to $9,638m, with prices up 1%. The main component contributing to the rise was other rural, up $172m (4%), with volumes up 1% and prices up 3%. Partly offsetting this rise was the cereal grains and cereal preparations component, down $87m (4%), with volumes up 1% and prices down 5%. Non-rural Goods Exports of non-rural goods, in seasonally adjusted terms at current prices, rose $2,046m (4%) to $55,784m, with volumes up 2% and prices up 1%. The main components contributing to the rise were:
Partly offsetting these rises were:
Net Exports of Goods Under Merchanting Net exports of goods under merchanting, in seasonally adjusted terms at current prices, rose $41m (45%), with volumes up 44% and prices up 1%. Non-monetary Gold Non-monetary gold, in original and seasonally adjusted terms at current prices, rose $251m (7%), with volumes up 14% and prices down 6%. GOODS DEBITS The trend estimate of goods debits at current prices rose $1,279m (2%) to $66,871m in the December quarter 2013. In seasonally adjusted terms at current prices, goods debits fell $137m to $66,443m. Consumption Goods Imports of consumption goods, in seasonally adjusted terms at current prices, rose $3m to $20,347m. The main components contributing to the rise were:
Partly offsetting these rises were:
Capital Goods Imports of capital goods, in seasonally adjusted terms at current prices, fell $438m (3%) to $16,312m, with volumes down 2% and prices down 1%. The main components contributing to the fall were:
Partly offsetting these falls were:
Intermediate and Other Merchandise Goods Imports of intermediate and other merchandise goods, in seasonally adjusted terms at current prices, rose $536m (2%) to $28,753m, with volumes up 1% and prices up 1%. The main component contributing to the rise was fuels and lubricants, up $948m (10%), with volumes up 3% and prices up 6%. Partly offsetting this rise were:
Non-monetary Gold Imports of non-monetary gold, in original and seasonally adjusted terms at current prices, fell $238m (19%) to $1,031m, with volumes down 14% and prices down 5%. SERVICES The trend estimate of net services at current prices was a deficit of $2,735m, a fall of $146m (5%) on the September quarter 2013 deficit of $2,881m. In seasonally adjusted terms at current prices, net services was a deficit of $2,555m, a fall of $362m (12%) on the September quarter 2013 deficit of $2,917m. Services Credits Services credits, in seasonally adjusted terms at current prices, rose $194m (1%) to $13,972m with prices up 1%. The main component contributing to the rise was travel, up $151m (2%), with volumes up 1% and prices up 1%. In seasonally adjusted terms, tourism related service credits rose $141m (2%) to $8,792m. Services Debits Services debits, in seasonally adjusted terms at current prices, fell $168m (1%) to $16,527m,with volumes down 1%. The main component contributing to the fall was transport, down $180m (4%), with volumes down 5% and prices up 1%. In seasonally adjusted terms, tourism related service debits fell $121m (1%) to $8,539m. PRIMARY INCOME The trend estimate of the net primary income deficit at current prices rose $409m (4%) to $9,763m in the December quarter 2013. The seasonally adjusted estimate of the net primary income deficit at current prices rose $536m (6%) to $9,898m in the December quarter 2013. Primary Income Credits Primary income credits, in seasonally adjusted terms at current prices, rose $906m (7%) to $13,123m mainly driven by a rise of $788m (17%) in direct investment assets, income on equity and investment fund shares combined with a rise of $83m (4%) in portfolio investment assets, interest. Primary Income Debits Primary income debits, in seasonally adjusted terms at current prices, rose $1,442m (7%) to $23,021m mainly driven by a rise of $722m (21%) in portfolio investment liabilities, investment income on equity and investment fund shares, a rise of $239m (3%) in direct investment liabilities, income on equity and investment fund shares, a rise of $230m (4%) in portfolio investment liabilities, interest, a rise of $166m (13%) in direct investment liabilities, interest and a rise of $68m (3%) in other investment income liabilities. SECONDARY INCOME The trend estimate of the net secondary income deficit at current prices, fell $18m (4%) to $485m in the December quarter 2013. In seasonally adjusted terms, the net secondary income deficit at current prices, fell $18m (4%) to $488m in the December quarter 2013. FINANCIAL ACCOUNT The balance on financial account, in original terms, recorded a net inflow of $11.6b, which was driven by a net inflow of debt of $16.5b and partly offset by a net outflow of equity of $5.0b. The financial account surplus decreased $3.2b to $11.6b in the December quarter 2013, from $14.7b in the September quarter 2013. Direct investment recorded a net inflow of $15.6b in the December quarter 2013, an increase of $7.2b from the net inflow of $8.5b in the September quarter 2013. This was driven by direct investment liabilities which recorded an inflow of $20.5b, an increase of $9.2b on the inflow of $11.3b in the September quarter 2013. This was partly offset by direct investment assets which recorded an outflow of $4.9b, an increase of $2.0b on the outflow of $2.9b in the September quarter 2013. Portfolio investment recorded a net inflow of $5.5b, a decrease of $7.8b on the net inflow of $13.3b in the September quarter 2013. This was driven by a net inflow recorded for debt securities of $16.2b, an increase of $2.5b on the inflow of $13.8b in the September quarter 2013. This was partly offset by equity and investment fund shares which recorded a net outflow of $10.7b, an increase of $10.3b on the outflow of $0.5b in the September quarter 2013. Financial derivatives recorded a net outflow of $11.0b, an increase of $7.4b from the net outflow of $3.7b in the September quarter 2013. Other investment recorded a net inflow of $6.5b, a turnaround of $9.4b from the net outflow of $2.9b in the September quarter 2013. This was driven by a net inflow of $17.1b of currency and deposits with deposit taking institutions, an increase of $9.3b on the net inflow of $7.8b in the September quarter 2013. Reserve assets recorded a net outflow of $5.0b, an increase of $4.6b from the net outflow of $0.4b in the September quarter 2013. INTERNATIONAL INVESTMENT POSITION ANALYSIS Australia's net international investment position at 31 December 2013 was a net foreign liability of $829.8b, down $15.7b on the 30 September 2013 position of $845.5b. Australia's net foreign equity position at 31 December 2013 was a net foreign asset of $23.1b, a turnaround of $50.0b on the 30 September 2013 position. This is the first time that a net foreign asset position has been recorded for Australia's net foreign equity position since the quarterly series was first compiled in September quarter 1988. The transition to an asset position has been driven by exchange rate impacts of $47.0b in the June quarter 2013 and $21.5b in the current quarter, noting that exchange rate movements only affect equity assets. The changes contributing to this result are shown in the following table.
SUPPLEMENTARY INFORMATION CONDITIONS The conditions in the global economy showed moderate improvements for most countries in the December quarter 2013. According to the Organisation for Economic Cooperation and Development (OECD)(footnote 1) , preliminary real GDP estimates in seasonally adjusted terms showed movement in quarterly growth for: China (1.8%), Korea (0.9%), USA (0.8%), UK (0.7%), Netherlands (0.7%), Germany (0.4%), Japan (0.3%), France (0.3%), Spain (0.3%) and Italy (0.1%). Australia's international investment activities during the quarter were as follows:
The Australian share market, as measured by the MSCI global index(footnote 2) , increased 2.7% in the December quarter 2013, following an increase of 8.1% in the September quarter 2013. There were increases in all major markets: Germany 11.3%, USA 9.7%, Japan 9.4%, Europe (excluding UK) 7.9%, Canada 6.9%, United Kingdom 4.3%, France 3.8%, Hong Kong 3.0%, Switzerland 2.5% and Singapore 0.9%. New Zealand decreased 3.4%. A market price change of -$14.6b was recorded for portfolio foreign equity assets and $7.0b in portfolio foreign equity liabilities in the December quarter 2013. According to Bloomberg(footnote 3) , the composite corporate benchmark yield increased in Australia from 4.25% to 4.42% and in UK from 3.64% to 3.85%. Yields decreased in the US from 3.38% to 3.37%, in Germany from 2.17% to 2.13% and in Japan from 0.53% to 0.49%. The long term 10 year government bond yields increased in all four major markets: UK from 2.73% to 3.04%, US from 2.64% to 3.04%, Japan from 0.69% to 0.74%, Germany from 1.78% to 1.94%. In Australia, the rate increased from 4.00% to 4.24%. Market price changes were recorded for both portfolio debt securities liabilities of -$6.8b and assets of $1.3b in the December quarter 2013. The Australian dollar depreciated against a number of the major currencies in the December quarter 2013. It decreased 6.1% against the South Korean won, 6.0% against the Euro, 5.8% against the Danish krona, 5.8% against the Swiss franc, 5.7% against the UK pound sterling, 5.2% against the Sri Lankan rupee, 5.2% against the Indian rupee, 4.9% against the Chinese renminbi, 4.1% against the Swedish Krona, 3.9% against the US dollar, 3.3% against the Malaysian ringgit, 3.3% against the New Zealand dollar, 3.2% against the PNG kina, 2.1% against the Philippine peso, and 0.9% against the South African rand. The Australian dollar appreciated 3.1% against the Japanese yen and 0.5% against the Indonesian rupiah. The Trade Weighted Index (TWI)(footnote 4) ,(footnote 5) recorded a decrease of 3.2%. This is reflected in the exchange rate changes for foreign assets of -$32.6b and foreign liabilities of $28.3b. RELATIONSHIP BETWEEN IPD, EPI AND IPI(footnote 6) In original terms, the IPD for total goods credits fell 0.7% and the chain Laspeyres price index for goods exports fell 0.4%. The export price index (EPI)(footnote 7) fell 0.5% during the December quarter 2013. In original terms, the IPD for total goods debits fell 0.4% and the chain Laspeyres price index for goods imports fell 0.6%. The import price index (IPI)(footnote 7) fell 0.6% during the December quarter 2013. Differences between the IPD and International Trade Price Indexes can arise due to a number of methodological factors including differences in pricing points, timing, coverage and weights.
Commodity Price Indexes The RBA Commodity Price Index(footnote 8) (average monthly index) for rural commodities increased 0.9% between the September quarter 2013 and December quarter 2013 while the EPI for rural goods decreased 1.0%. The RBA Commodity Price Index for non-rural commodities decreased 0.4% while the EPI for non-rural goods total (excluding non-monetary gold) remained steady. Differences between the RBA Commodity Price Index and ABS price measures are largely a consequence of methodological differences used in the construction of the respective indexes, including coverage of included commodities and timing of source data. CALENDAR YEAR 2013 SITUATION CURRENT ACCOUNT In original terms, the balance on current account for 2013 was a deficit of $45.6b, a decrease of $16.3b (26%) on the deficit of $61.8b recorded for 2012. The goods and services deficit was $7.1b, a decrease of $15.8b (69%) on the deficit of $22.9b recorded in 2012. Goods credits increased $14.9b (6%) and goods debits decreased $1.1b. The 2013 services deficit of $11.4b was an increase of $0.2b (2%) on the deficit of $11.2b in 2012. The 2013 primary income deficit decreased $0.3b (1%), with an increase in primary income credits of $3.0b (6%) largely offset by an increase in primary income debits of $2.8b (3%). The 2013 secondary income deficit decreased $0.2b (8%), with an increase in secondary income credits of $0.3b (4%) partly offset by an increase in secondary income debits of $0.1b (1%). FINANCIAL ACCOUNT The balance on financial account recorded a net inflow of $46.2b, with a net inflow on debt of $35.1b and a net inflow on equity of $11.1b. This result was down $16.4b on the net inflow of $62.6b recorded for the previous year as a result of:
INTERNATIONAL INVESTMENT POSITION Australia's net international investment position as at 31 December 2013 was a net foreign liability of $829.8b. This was up $1.7b (0.2%) on the position a year earlier as a result of:
During 2013, Australia's net foreign equity changed from a net liability position of $72.7b to a net asset position of $23.1b. This was a -$95.8b change on the previous calendar year due to exchange rate changes of -$56.0b, price changes of -$30.7b, and other changes of -$20.2b. These were partially offset by net transactions of $11.1b. Australia's net foreign debt liability rose to $852.9b, up $97.5b (13%) on the previous calendar year, with exchange rate changes of $49.0b, net transactions of $35.1b, other changes of $9.1b, and price changes of $4.4b. At 31 December 2013, the ratio of Australia's net international investment position to GDP using the latest available GDP figure (for the year ended 30 September 2013 using current prices) was 54.0%. This compares with 55.2% one year ago and 52.9% one decade ago. 1 OECD Statistics Quarterly National Account, organisation for Economic Cooperation and Development - Economic Department, viewed 19 February 2014 . <back 2 MSCI All Country Indicies 2013, Morgan Stanley Capital International, viewed 14 January 2014, . <back 3 Bloomberg, Blooming Corporate Services, viewed 3 January 2014. <back 4 Exchange Rates - Daily - 2010 to 2013, Reserve Bank of Australia - Statistical Tables, viewed 14 January 2014, <back 5 Bloomberg, Blooming Corporate Services, viewed 14 January 2014 <back 6 In this commentary movements in indexes are based on data to four decimal places. <back 7 Source: International Trade Price Indexes, Australia (cat. no. 6457.0) <back 8 For RBA Commodity Price Index methodology, see paragraph 23 of the Explanatory Notes. <back Document Selection These documents will be presented in a new window.
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