5302.0 - Balance of Payments and International Investment Position, Australia, March 2011 
Quality Declaration
Quality Declaration ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 31/05/2011
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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 deficit of $9,089m, an increase of $7,781m on the December quarter 2010 deficit of $1,308m. The net deficit on goods was a turnaround of $7,119m on the December quarter 2010 surplus. Goods credits decreased $6,608m (10%) and goods debits increased $511m (1%). The net deficit on services increased $661m (14%) on the December quarter 2010 deficit of $4,775m. The increase in the balance on goods and services deficit, in seasonally adjusted chain volume terms, is expected to detract 2.4 percentage points from growth in the March quarter 2011 volume measure of GDP, assuming no significant revision to the GDP chain volume estimate for the December quarter 2010. Terms of Trade and Implicit Price Deflator Australia's seasonally adjusted terms of trade rose 5.8% to 117.7 with an increase of 6.5% in the implicit price deflator (IPD) for goods and services credits and an increase of 0.6% in the IPD for goods and services debits. The trend estimate of the terms of trade for net goods and services increased 4.5% to 118.6. Goods The trend estimate of net goods at current prices was a surplus of $7,613m, an increase of $14m on the December quarter 2010 surplus of $7,599m. In seasonally adjusted terms at current prices, net goods recorded a surplus of $4,832m, a decrease of $2,879m (37%) on the December quarter 2010 surplus of $7,711m.
Services
GOODS CREDITS The trend estimate of goods credits at current prices fell $24m to $61,145m in the March quarter 2011. In seasonally adjusted terms at current prices, goods credits fell $1,951m (3%) to $58,887m, with volumes down 10% and prices up 8%. Rural Goods Exports of rural goods, in seasonally adjusted terms at current prices, rose $409m (6%) to $7,538m with prices up 5%. The main components contributing to the increase were:
Non-rural Goods Exports of non-rural goods, in seasonally adjusted terms at current prices, fell $2,217m (4%) to $47,535m, with volumes down 12% and prices up 8%. The main components contributing to the decrease were:
Components partly offsetting these decreases were:
Net Exports of Goods Under Merchanting Net exports of goods under merchanting, in seasonally adjusted terms at current prices, rose $3m (4%) to $78m with prices up 4%. Non-monetary Gold Exports of non-monetary gold, in seasonally adjusted terms at current prices, fell $147m (4%) to $3,736m, with volumes down 4%. GOODS DEBITS The trend estimate of goods debits at current prices fell $38m to $53,532m in the March quarter 2011. In seasonally adjusted terms at current prices, goods debits rose $928m (2%) to $54,055m, with volumes up 1% and prices up 1%. Consumption Goods Imports of consumption goods, in seasonally adjusted terms at current prices, fell $265m (2%) to $15,778m, with volumes down 2%. The main components contributing to the decrease were:
Capital Goods Imports of capital goods, in seasonally adjusted terms at current prices, rose $389m (3%) to $12,633m with volumes up 5% and prices down 2%. The main components contributing to the increase were:
Intermediate and Other Merchandise Goods Imports of intermediate and other merchandise goods, in seasonally adjusted terms at current prices, rose $1,334m (6%) to $24,596m, with volumes up 2% and prices up 4%. The main components contributing to the increase were:
Non-monetary Gold Imports of non-monetary gold, in seasonally adjusted terms at current prices, fell $529m (34%) to $1,048m, with volumes down 33%. SERVICES The trend estimate of net services at current prices was a deficit of $1,751m, an increase of $341m (24%) on the December quarter 2010 deficit of $1,410m. In seasonally adjusted terms at current prices, net services recorded a deficit of $1,802m, an increase of $457m (34%). Services Credits Services credits, in seasonally adjusted terms at current prices, fell $69m (1%) to $12,886m with volumes down 1% and prices up 1%. The main components contributing to the decrease were:
Offsetting these decreases was the other services component, up $66m (2%), with volumes up 1% and prices up 1%. In seasonally adjusted terms, tourism related service credits fell $117m (1%) to $8,616m. Services Debits Services debits, in seasonally adjusted terms at current prices, rose $388m (3%) to $14,688m, with volumes up 3%. The components with the most significant increases were:
In seasonally adjusted terms tourism related service debits rose $306m (4%) to $8,140m. PRIMARY INCOME The trend estimate of the net primary income deficit at current prices increased $712m (5%) in the March quarter 2011 to $13,796m. In seasonally adjusted terms, the net primary income deficit decreased $935m (7%) in the March quarter 2011 to $13,229m. Primary Income Credits Primary income credits, in seasonally adjusted terms at current prices, decreased $858m (8%) to $10,109m. The main contributors to the decrease were:
These decreases were partly offset by a $58m (2%) increase in portfolio investment assets, interest. Primary Income Debits Primary income debits, in seasonally adjusted terms at current prices, decreased $1,793m (7%) to $23,338m. The main contributors to the decrease were:
These decreases were partly offset by a $284m (9%) increase in portfolio investment liabilities, investment income on equity and investment fund shares. SECONDARY INCOME The trend estimate of net secondary income deficit at current prices, decreased $40m (14%) in the March quarter 2011 to $249m. In seasonally adjusted terms the net secondary income deficit at current prices, decreased $46m (16%) in the March quarter 2011 to $247m. FINANCIAL ACCOUNT The balance on financial account, in original terms, recorded a net inflow of $9.9b, with a net inflow of $22.6b of debt and a net outflow of $12.7b of equity. The financial account surplus increased $0.7b from $9.2b in December quarter 2010 to $9.9b in March quarter 2011. Direct investment recorded a net inflow of $2.5b in March quarter 2011, a decrease of $4.0b from the net inflow of $6.6b in December quarter 2010, where:
Portfolio investment recorded a net outflow of $1.3b, a turnaround of $20.7b on the net inflow of $19.4b in the December quarter 2010. This was driven by:
Portfolio investment liabilities debt securities decreased by $1.7b from $20.6b in the December quarter 2010 to $18.9b in the March quarter 2011. Financial derivatives recorded a net outflow of $6.7b, an increase of $0.9b from the net outflow of $5.7b in the December quarter 2010. The main contributor was deposit-taking corporations, except the central bank with a net outflow of $4.2b. Other investment recorded a net inflow of $8.8b, a turnaround of $18.7b from the net outflow of $9.9b in the December quarter 2010. Reserve assets recorded a net inflow of $6.6b, a turnaround of $7.7b from the net outflow of $1.1b in the December quarter 2010. INTERNATIONAL INVESTMENT POSITION ANALYSIS Australia's net international investment position at 31 March 2011 was a net foreign liability of $780.6b, up $6.3b (1%) on the 31 December 2010 position of $774.3b. The changes contributing to this result are shown in the following table.
SUPPLEMENTARY INFORMATION CONDITIONS The conditions in the global economy continued to improve for most countries in the March quarter 2011. According to the Organisation for Economic Cooperation and Development (OECD), preliminary real GDP estimates in seasonally adjusted terms showed positive quarterly growth for: Germany (1.5%), Korea (1.4%), total EU (0.8%), UK (0.5%) and USA (0.4%). Australia's international investment activities increased moderately during the quarter. Foreign asset and liability transactions were -$9.0b and $18.9b in the March quarter 2011, compared to -$14.0b and $23.2b respectively in the December quarter 2010. The Australian share market, as measured by the MSCI global index, increased 2.3% in March quarter 2011, a decrease of 0.6% on the 2.9% increase in December quarter 2010. There were increases in most major markets: Europe ex. UK 7.4%, USA 5.4%, Canada 5.3%, France 4.5%, Germany 1.3% and the UK 0.4%. The world index increased 4.3%. Market decreases were seen in: Singapore -2.3%, Switzerland -1.2% and Hong Kong -0.7%. A market price change of $10.1b was recorded for foreign equity assets while the market price change for foreign equity liabilities was insignificant during March quarter 2011. According to Reuters, the composite corporate benchmark yield increased in the UK (4.57% to 4.72%), USA ( 4.18% to 4.19%), Germany (3.87% to 4.16%) and Japan (1.38% to 1.50%). Long term government bond yields increased in all major markets over March quarter 2011. The 10 year government bond yields increased from 3.30% to 3.47% in the US, 3.40% to 3.69% in the UK, 2.89% to 3.35% in Germany and 1.12% to 1.26% in Japan. In Australia, the rate decreased from 5.56% to 5.44%. This is reflected in the market price changes for both portfolio debt securities liabilities (-$0.4b) and assets ($0.9b) in the March quarter 2011. The AUD appreciated against a number of the major currencies in the March quarter 2011. It increased against the Japanese yen (3.3%), the New Zealand dollar (3.2%), the Hong Kong dollar (1.8%), the USD (1.7%) and the Chinese Renminbi (1.1%). The AUD decreased against the Euro (-4.4%), UK pound sterling (-2.5%) and the Canadian dollar (-1.3%). The Trade Weighted Index (TWI) recorded an increase of 0.7%. The net impact of exchange rate changes was an increase of $2.1b and $5.5b respectively on Australia's net foreign assets and foreign liabilities position. RELATIONSHIP BETWEEN IPD, EPI AND IPI(footnote 1) In original terms, the IPD for total goods credits rose 7.4% and the chain Laspeyres price index for goods exports rose 5.8%. The export price index (EPI) rose 5.2% during the March quarter 2011. The EPI for wool and sheepskins component rose 22.9% while the IPD rose 16.9%, this is due to a number of factors including differences in pricing points, timing, coverage and weights. In original terms, the IPD for total goods debits rose 1.2% and the chain Laspeyres price index for goods imports rose 1.3%. The import price index (IPI) rose 1.4% during the March quarter 2011.
Commodity Price Indexes The RBA Commodity Price Index(footnote 2) (average monthly index) for rural commodities increased 12.5% between the December 2010 and March 2011 quarters while the EPI for rural goods total increased 5.8%. The RBA Commodity Price Index for non-rural commodities increased 6.7% while the EPI for non-rural goods total (excluding non-monetary gold) increased 5.6%. 1 In this commentary movements in indexes are based on data to four decimal places. <back 2 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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