5302.0 - Balance of Payments and International Investment Position, Australia, Jun 2017 
Quality Declaration
Quality Declaration ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 05/09/2017
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ANALYSIS AND COMMENTS
In seasonally adjusted current price terms, the June quarter 2017 current account deficit was $9,562m, a rise of $4,808m on the March quarter 2017 deficit. In trend current price terms, the June quarter 2017 current account deficit was $5,623m, a rise of $250m on the March quarter 2017 deficit. The contributors to the current account balance, in seasonally adjusted and trend terms at current prices, are shown in the following table.
TERMS OF TRADE(footnote 1) Australia's seasonally adjusted terms of trade on net goods and services for the June quarter 2017 fell 6.0% to 103.6, with a decrease of 5.4% in the implicit price deflator (IPD) for goods and services credits and an increase of 0.7% in the IPD for goods and services debits. In trend terms, the terms of trade for net goods and services rose 2.0% to 108.9. BALANCE ON GOODS AND SERVICES In seasonally adjusted chain volume terms, the balance on goods and services was a deficit of $196m, a fall of $1,363m on the March quarter 2017 deficit of $1,559m. The net deficit on goods fell $1,201m on the March quarter 2017 deficit of $1,302m. Goods credits rose $2,173m (3%) and goods debits rose $972m (1%). The net deficit on services fell $164m on the March quarter 2017 deficit of $258m. The fall in the balance on goods and services deficit, in seasonally adjusted chain volume terms, is expected to contribute 0.3 percentage points to growth in the June quarter 2017 volume measure of GDP, assuming no significant revision to the GDP chain volume estimate for the March quarter 2017. Goods The trend estimate of net goods at current prices for the June quarter 2017 was a surplus of $7,631m, a rise of $1,181m on the March quarter 2017 surplus of $6,450m. In seasonally adjusted terms at current prices, net goods was a surplus of $3,633m, a fall of $4,109m on the March quarter 2017 surplus of $7,742m.
GOODS CREDITS The trend estimate of goods credits at current prices rose $2,754m (4%) to $79,707m in the June quarter 2017. In seasonally adjusted terms at current prices, goods credits fell $2,991m (4%) to $75,451m, with volumes up 3% and prices down 7%. Rural Goods Exports of rural goods, in seasonally adjusted terms at current prices, rose $87m (1%) to $12,260m, with volumes down 1% and prices up 2%. The main components contributing to the rise were:
Non-rural Goods Exports of non-rural goods, in seasonally adjusted terms at current prices, fell $3,687m (6%) to $58,202m, with volumes up 4% and prices down 9%. The main components contributing to the fall were:
Partly offsetting these falls were:
Net Exports of Goods Under Merchanting Net exports of goods under merchanting, in seasonally adjusted terms at current prices, remained steady at $80m, with volumes up 12% and prices down 11%. Non-monetary Gold Non-monetary gold, in original and seasonally adjusted terms at current prices, rose $608m (14%), with volumes up 10% and prices up 4%. GOODS DEBITS The trend estimate of goods debits at current prices rose $1,573m (2%) to $72,076m in the June quarter 2017. In seasonally adjusted terms at current prices, goods debits rose $1,117m (2%) to $71,818m, with volumes up 1%. Consumption Goods Imports of consumption goods, in seasonally adjusted terms at current prices, rose $335m (1%) to $25,062m, with volumes up 2%. The main components contributing to the rise were:
Capital Goods Imports of capital goods, in seasonally adjusted terms at current prices, rose $746m (4%) to $17,951m, with volumes up 3% and prices up 1%. The main components contributing to the rise were:
Intermediate and Other Merchandise Goods Imports of intermediate and other merchandise goods, in seasonally adjusted terms at current prices, rose $323m (1%) to $27,527m, with volumes up 2%. The main component contributing to the rise was processed industrial supplies n.e.s., up $325m (4%), with volumes up 3% and prices up 1%. Non-monetary Gold Imports of non-monetary gold, in original and seasonally adjusted terms at current prices, fell $286m (18%), with volumes down 22% and prices up 4%. SERVICES The trend estimate of net services at current prices was a deficit of $492m, a rise of $129m on the March quarter 2017 deficit of $363m. In seasonally adjusted terms at current prices, net services was a deficit of $563m, a rise of $224m on the March quarter 2017 deficit of $339m.
Services Credits Services credits, in seasonally adjusted terms at current prices, rose $298m (2%) to $18,697m, with volumes up 1%. The main component contributing to the rise was travel, up $279m (2%), with volumes up 2%. In seasonally adjusted terms, tourism related services credits rose $266m (2%) to $12,535m. Services Debits Services debits, in seasonally adjusted terms at current prices, rose $523m (3%) to $19,260m, with prices up 2%. The main components contributing to the rise were:
In seasonally adjusted terms, tourism related services debits rose $328m (3%) to $10,469m. PRIMARY INCOME The trend estimate of the net primary income deficit at current prices rose $1,292m to $12,283m in the June Quarter 2017. In seasonally adjusted terms at current prices, the net primary income deficit rose $499m to $12,159m in the June Quarter 2017. Primary Income Credits Primary income credits, in seasonally adjusted terms at current prices, rose $344m (2%) to $14,915m. The main component contributing to the rise was direct investment assets, income on equity and investment fund shares, up $353m (6%). Primary Income Debits Primary income debits, in seasonally adjusted terms at current prices, rose $844m (3%) to $27,074m. The main component contributing to the rise was direct investment liabilities, income on equity and investment fund shares, up $434m (4%). SECONDARY INCOME The trend estimate of the net secondary income deficit at current prices rose $10m to $479m in the June quarter 2017. In seasonally adjusted terms at current prices, the net secondary income deficit fell $25m to $472m in the June quarter 2017. CAPITAL ACCOUNT In original terms, the capital account deficit was $151m, an increase of $7m on the March quarter 2017 deficit of $144m. Capital account credits increased $17m and capital account debits increased $24m (16%) in the June quarter 2017. FINANCIAL ACCOUNT The balance on the financial account, in original terms, recorded a net inflow of $3.9b, which was driven by a net inflow of equity of $27.3b and a net outflow of debt of $23.3b. The financial account surplus decreased $2.3b from $6.3b to $3.9b in the June quarter 2017. Direct Investment Direct investment recorded a net inflow of $25.2b in the June quarter 2017, an increase of $9.7b on the net inflow of $15.5b in the March quarter 2017, where:
Portfolio Investment Portfolio investment recorded a net inflow of $1.3b in the June quarter 2017, a turnaround of $5.1b on the net outflow of $3.8b in the March quarter 2017, where:
Financial Derivatives Financial derivatives recorded a net inflow of $2.1b in the June quarter 2017, an increase of $1.9b on the net inflow of $0.2b in the March quarter 2017. Other Investment Other investment recorded a net outflow of $19.3b in the June quarter 2017, an increase of $17.2b on the net outflow of $2.1b in the March quarter 2017. This was driven by net outflows of $10.9b in currency and deposits and $6.2b in loans. Reserve Assets Reserve assets recorded an outflow of $5.4b in the June quarter 2017, an increase of $1.8b on the outflow of $3.6b in the March quarter 2017. INTERNATIONAL INVESTMENT POSITION (IIP) Australia's net IIP liability position was $1,000.3b at 30 June 2017, a decrease of $24.4b (2%) on the revised 31 March 2017 position of $1,024.6b. Australia's net foreign debt liability decreased $21.2b (2%) to $990.6b. Australia's net foreign equity liability decreased $3.2b (25%) to $9.7b at 30 June 2017. The changes contributing to this result are shown in the following table.
SUPPLEMENTARY INFORMATION CONDITIONS The conditions in the global economy showed modest growth in Australia’s major trading partner countries in the June quarter 2017. According to the Organisation for Economic Cooperation and Development (OECD)(footnote 2) preliminary growth rates compared to last quarter in seasonally adjusted terms showed quarterly growth for China (1.7%), Indonesia (1.2%), Japan (1.0%), South Korea (0.6%), USA (0.6%), Euro 28 (0.6%), France (0.5%) and UK (0.3%).
The Australian share market, as measured by the MSCI global index(footnote 3), decreased 3.3% in the June quarter 2017, following an increase of 4.1% in the March quarter 2017. Increases were recorded in Hong Kong (6.2%), Japan (5.9%), New Zealand (3.1%), Switzerland (3.0%), the USA (2.6%), Singapore (2.4%) and France (0.6%). Decreases were recorded in the UK (0.4%), Germany (1.8%) and Canada (2.5%). A market price change of $1.7b was recorded for foreign equity assets and -$20.5b in foreign equity liabilities in the June quarter 2017. According to Bloomberg(footnote 4), the composite corporate benchmark yields increased in Germany from 0.99% to 1.03%, the UK from 2.20% to 2.24% and Japan from 0.28% to 0.31%. The yields decreased in Australia from 3.30% to 3.27% and the USA from 3.37% to 3.25%. The long-term 10 year government bond yields increased in Germany from 0.33% to 0.47%, the UK from 1.14% to 1.26% and Japan from 0.07% to 0.09%. The yields decreased in Australia from 2.81% to 2.41% and the USA from 2.40% to 2.31% over the June quarter 2017. A market price change of $1.2b was recorded for portfolio debt securities assets and $2.5b in portfolio debt securities liabilities in the June quarter 2017. The Australian dollar saw mixed movements against major currencies in the June quarter 2017. The Australian dollar appreciated 2.85% against the South Korean won, 1.07% against the Hong Kong dollar, 0.78% against the New Taiwan dollar, 0.66% against the Indonesian rupiah, 0.63% against the US dollar, 0.57% against the Japanese yen and 0.42% against the Indian rupee. It depreciated 6.02% against the European euro, 4.11% against the New Zealand dollar, 3.79% against the Swiss franc, 3.48% against the UK pound sterling, 1.26% against the Chinese renminbi, 2.35% against the Malaysian ringgit, 2.05% against the Canadian dollar, 0.82% against the Singapore dollar and 0.72% against the Thai baht. The Trade Weighted Index (TWI)(footnote 4),(footnote 5) fell by 1.06% to 65.50 in the June quarter 2017. These movements were reflected in exchange rate changes for foreign assets of -$16.0b and foreign liabilities of $7.8b in the June quarter 2017. RELATIONSHIP BETWEEN IPD, EPI AND IPI(footnote 6) In original terms, the IPD for total goods credits fell 6.1% and the chain Laspeyres price index for goods exports fell 6.1%. The Export Price Index (EPI)(footnote 7) fell 5.7% during the June quarter 2017. In original terms, the IPD for total goods debits rose 0.2% and the chain Laspeyres price index for goods imports fell 0.1%. The Import Price Index (IPI)(footnote 7) fell 0.1% during the June quarter 2017. 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 (average monthly index) for rural commodities increased 3.5% between the March quarter 2017 and the June quarter 2017 while the EPI for rural goods increased 2.1%. The RBA Commodity Price Index for non-rural commodities decreased 8.1% between the March quarter 2017 and the June quarter 2017 while the EPI for non-rural goods total (excluding non-monetary gold) decreased 7.8%. 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. FINANCIAL YEAR 2016-17 SITUATION CURRENT ACCOUNT In original terms, the balance on current account for 2016-17 was a deficit of $29.5b, a fall of $44.7b on the deficit of $74.2b recorded for 2015-16. The balance on goods and services was a surplus of $12.2b, a turnaround of $48.9b on the deficit of $36.7b recorded for 2015-16. Goods and services credits rose $53.2b (17%) and goods and services debits rose $4.3b (1%). The low value threshold adjustments applied to goods debits for 2016-17, rose $2.1b to $9.3b. The 2016-17 net primary income deficit rose $4.0b, with a rise in primary income credits of $6.0b (11%) and a rise in primary income debits of $9.9b (11%). The 2016-17 net secondary income deficit rose $0.3b, with a rise in secondary income credits of $0.1b (1%) and a rise in secondary income debits of $0.4b (4%). FINANCIAL ACCOUNT The balance on financial account recorded a net inflow of $25.4b, with a net inflow on equity of $80.8b and a net outflow on debt of $55.4b. This result was a decrease of $52.4b on the net inflow of $77.8b recorded for the previous financial year as a result of:
INTERNATIONAL INVESTMENT POSITION Australia's net international investment position as at 30 June 2017 was a net foreign liability of $1,000.3b. This was a decrease of $46.4b (4%) on the position a year earlier as a result of:
During 2016-17, Australia's net foreign equity experienced a turnaround of $19.1b on the previous financial year, from a net asset position of $9.5b to a net liability position of $9.7b. This was contributed to by net transactions of $80.8b and exchange rate changes of $28.4b, offset by price changes of -$74.2b and other changes of -$15.9b. Australia's net foreign debt liability decreased to $990.6b, a decrease of $65.5b (6%) on the previous financial year, with net transactions of -$55.4b, exchange rate changes of -$13.4b and price changes of -$4.4b, partly offset by other changes of $7.7b. At 30 June 2017, the ratio of Australia's net international investment position to GDP using the latest available GDP figure (for the year ended 31 March 2017 using current prices) was 58.0%. This compares with 63.2% one year ago. 1 In this commentary movements in indexes are based on data to four decimal places. <back 2 OECD Statistics Quarterly National Account, Organisation for Economic Cooperation and Development – Economic Department, viewed 22 August 2017. <back 3 MSCI Global Market Indexes 2016, Morgan Stanley Capital International, viewed 5 July 2017. <back 4 Bloomberg, Bloomberg Professional Service, viewed 24 July 2017. <back 5 Exchange Rates – Daily 2014 to Current, Reserve Bank of Australia - Statistical Tables, viewed 4 July 2017. <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 Document Selection These documents will be presented in a new window.
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