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5302.0 - Balance of Payments and International Investment Position, Australia, Sep 2009  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 08/12/2009   
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15/12/2009 NOTE: The Analysis and comments was re-issued on 15 December 2009 due to a minor change in the Goods and services, chain volume measure references section.

ANALYSIS AND COMMENTS


BALANCE OF PAYMENTS


CURRENT ACCOUNT

The trend estimate of the balance on current account for the September quarter 2009 was a deficit of $15,061m in current price terms. This was an increase of $3,808m (34%) on the deficit recorded for the June quarter 2009 where:

  • the goods and services deficit rose $3,557m to $3,724m
  • the primary income deficit rose $270m (2%) to $11,224m
  • the secondary income deficit fell $20m (15%) to $113m.

In seasonally adjusted current price terms, the current account deficit rose $3,050m (23%) to $16,183m between the June quarter 2009 and September quarter 2009 where:
  • the goods and services deficit rose $4,225m to $5,409m
  • the primary income deficit fell $1,149m (10%) to $10,677m
  • the secondary income deficit fell $25m (20%) to $98m.


Goods and Services

The trend estimate of the balance on goods and services at current prices was a deficit of $3,724m, an increase of $3,557m on the June quarter 2009 deficit.

In seasonally adjusted terms, the balance on goods and services was a deficit of $5,409m, an increase of $4,225m on the June quarter 2009 deficit where:
  • the net goods deficit rose $3,847m to $4,767m
  • the net services deficit rose $377m to $641m.

The increase in the goods deficit resulted from the decrease in goods credits (exports), down $2,863m (6%) and the increase in goods debits (imports), up $985m (2%).

Contributing to the decrease in goods credits were:
  • non-rural goods, down $1,703m (5%)
  • rural goods, down $763m (11%)
  • non-monetary gold, down $398m (12%).

Contributing to the increase in goods debits were:
  • capital goods, up $652m (6%)
  • intermediate and other merchandise goods, up $550m (3%).

Partly offsetting these increases was non-monetary gold, down $267m (15%).

The increase in the services deficit resulted from the increase in services debits, up $786m (6%) exceeding the increase in services credits, up $408m (3%).

In seasonally adjusted volume terms, the balance on goods and services was a deficit of $3,955m, a turnaround of $4,822m on the June quarter 2009 surplus. The net deficit on goods was $3,042m, a turnaround of $4,051m. Goods credits fell $1,717m (4%) and goods debits rose $2,334m (5%). The net services balance was a deficit of $912m, an increase of $769m on the June quarter 2009 deficit.

The increase of $4,822m in the deficit on goods and services in volume terms is expected to detract 1.8 percentage points from growth in the September quarter 2009 volume measure of GDP, assuming no significant revision to the GDP chain volume estimate for the June quarter 2009.

Goods and Services, Chain volume measures (a)
Graph: Goods and Services, Chain volume measures (a)



Goods Credits

The trend estimate of goods credits at current prices fell $6,333m (13%) to $44,323m in the September quarter 2009.

In seasonally adjusted terms at current prices, goods credits fell $2,863m (6%) to $45,008m.

Exports of rural goods, in seasonally adjusted terms at current prices, fell $763m (11%) to $6,304m, with volumes down 10% and prices down 1%. All components contributed to this fall in rural goods, with the largest decreases in:
  • cereal grains and cereal preparations, down $394m (22%), with volumes down 20% and prices down 2%
  • other rural, down $230m (8%), with volumes down 6% and prices down 2%
  • meat and meat preparations, down $80m (5%), with volumes down 1% and prices down 3%.

Exports of non-rural goods, in seasonally adjusted terms at current prices, fell $1,703m (5%) to $35,583m, with volumes down 2% and prices down 2%. Components contributing to this fall in non-rural goods, were:
  • coal, coke and briquettes, down $1,121m (11%), with volumes up 7% and prices down 18%
  • metal ores and minerals, down $389m (4%), with volumes down 3% and prices down 1%
  • other mineral fuels, down $166m (4%), volumes down 13% and with prices up 10%.

Exports of non-monetary gold, in seasonally adjusted terms at current prices, fell $398m (12%) to $3,045m with volumes down 7% and prices down 5%.

Goods Credits, Chain Volume Measures (a)
Graph: Goods Credits, Chain Volume Measures (a)



Goods Debits

The trend estimate of goods debits at current prices fell $2,749m (5%) to $47,708m in the September quarter 2009.

In seasonally adjusted current price terms, goods debits rose $985m (2%) to $49,776m.

Imports of consumption goods, in seasonally adjusted terms at current prices, rose $50m to $15,257m, with volumes up 5% and prices down 4%. The largest increases were in:
  • non-industrial transport equipment, up $491m (17%), with volumes up 19% and prices down 1%
  • food and beverages, mainly for consumption, up $107m (5%), with volumes up 11% and prices down 6%.

Partly offsetting these increases were:
  • consumption goods n.e.s., down $234m (5%), with volumes down 2% and prices down 3%
  • textiles, clothing and footwear, down $113m (6%), with volumes up 3% and prices down 8%
  • toys, books and leisure goods, down $108m (8%), with volumes down 1% and prices down 7%.

Imports of capital goods, in seasonally adjusted terms at current prices, rose $652m (6%) to $11,715m, with volumes up 15% and prices down 8%. The largest increases were in:
  • industrial transport equipment n.e.s., up $432m (46%), with volumes up 48% and prices down 1%.
  • capital goods n.e.s., up $360m (13%) with volumes up 22% and prices down 7%.

Partly offsetting this increase was machinery and industrial equipment down $207m (5%), with volumes up 3% and prices down 8%.

Imports of intermediate and other merchandise goods, in seasonally adjusted terms at current prices, rose $550m (3%) to $21,256m, with volumes up 2% and prices up 1%. The largest increase was in the fuels and lubricants component, up $915m (16%), with prices up 17%.

Partly offsetting this increase were:
  • other parts for capital goods, down $189m (5%), with prices down 5%
  • other merchandise goods, down $129m (34%), with volumes down 32% and prices down 3%
  • organic and inorganic chemicals, down $101m (9%), with volumes down 6% and prices down 2%.

Imports of non-monetary gold, in seasonally adjusted terms at current prices, fell $267m (15%) to $1,547m, with volumes down 10% and prices down 5%.

Goods Debits, chain volume measures (a)
Graph: Goods Debits, chain volume measures (a)



Services

The trend estimate of net services at current prices was a deficit of $339m, a decrease of $27m (7%) on the revised June quarter 2009 deficit of $366m.

In seasonally adjusted terms at current prices, net services recorded a deficit of $641m, an increase of $377m on the revised June quarter 2009 deficit of $264m.

Services credits, in seasonally adjusted terms at current prices, rose $408m (3%) to $13,723m. The largest increases were in:
  • other services, up $247m (7%), with volumes up 7% and prices up 1%
  • travel services, up $149m (2%), with volumes up 1% and prices up 1%.

Services debits, in seasonally adjusted terms at current prices, rose $786m (6%) to $14,365m. The largest increases were in:
  • travel services, up $437m (8%), with volumes up 12% and prices down 4%
  • other services, up $282m (6%), with volumes up 13% and prices down 6%
  • transport services, up $70m (2%), with volumes down 1% and prices up 3%.

Seasonally adjusted, tourism related services credits rose $135m (2%) to $9,092m, and tourism related services debits rose $577m (8%) to $7,555m.


IMPLICIT PRICE DEFLATOR*

In seasonally adjusted terms, the implicit price deflator (IPD) for total goods and services credits fell 1.8%. In original terms, it decreased 1.8% and the chain Laspeyres price index for goods and services credits fell 2.7%. In original terms, the IPD for goods credits fell 2.5% and the IPD for services credits rose 0.3%.

The total goods and services debits IPD fell 2.8% in seasonally adjusted terms. In original terms, it fell 2.5% and the chain Laspeyres price index for goods and services debits fell 3.2%. In original terms, the IPD for goods debits fell 2.5% and the IPD for services debits fell 2.8%.

Implicit Price Deflator (a)
Graph: Implicit Price Deflator (a)



Relationship to IPI and EPI*

In original terms, the implicit price deflator (IPD) for total goods credits fell 2.5% and the chain Laspeyres price index for goods exports fell 3.5%. The export price index (EPI) fell 9.6% during the September quarter 2009.

The difference between the EPI and IPD is driven by several components including cereal grains and cereal preparations; metal ores and minerals; coal, coke and briquettes; and, other mineral fuels. Differences in these two measures result from differences in pricing points, coverage and weights.

In original terms, the implicit price deflator for total goods debits fell 2.5% and the chain Laspeyres price index for goods imports fell 3.4%. The import price index (IPI) fell 3.0% during the September quarter 2009.


Terms of Trade*

Australia's seasonally adjusted terms of trade rose 1% to 97.7, with a decrease of 1.8% in the IPD for goods and services credits and a decrease of 2.8% in the goods and services debits IPD. The trend estimate of the terms of trade decreased 4.3% to 96.1.

* In this commentary movements in indexes are based on data to four decimal places.


Primary Income

The trend estimate of the net primary income deficit increased $270m (2%) to $11,224m in the September quarter 2009.

In seasonally adjusted terms the net primary income deficit decreased $1,149m (10%) to $10,677m. Income debits decreased $768m (4%) to $20,508m and income credits increased $381m (4%) to $9,831m.

The main contributors to the decrease in income debits were:
  • income on portfolio investment liabilities, down $410m (4%)
  • income on other investment liabilities, down $199m (20%)
  • income on direct investment liabilities, down $198m (2%).

The main contributor to the increase in income credits was an increase of $363m (8%) in income on direct investment assets.

In original terms the primary income deficit increased $253m (2%) to $11,833m in the September quarter 2009. Primary income debits rose $314m (1%) to $21,474m. Primary income credits increased $62m (1%) to $9,641m.

NET PRIMARY INCOME
Graph: NET PRIMARY INCOME



Secondary Income

In seasonally adjusted terms, the net secondary income balance was a deficit of $98m, a decrease of $25m (20%) on the revised June quarter 2009 deficit of $123m. Secondary income credits fell $29m (2%) and secondary income debits fell $54m (3%) in the September quarter 2009.


CAPITAL AND FINANCIAL ACCOUNT

Capital Account

In original terms, the capital account deficit was $32m, down $10m on the June quarter 2009 deficit of $42m, with debits down $10m to $32m. There were no acquisitions/disposals of non-produced, non-financial assets in September quarter 2009.


Financial Account

The financial account recorded a net inflow of $17.4b, with a $6.5b net inflow of equity and a $10.9b net inflow of debt.

The financial account surplus increased $5.9b from $11.5b in the June quarter 2009, in line with the $17.9b current account deficit in the September quarter 2009.

Direct investment recorded a net inflow of $3.3b in the September quarter 2009, a turnaround of $ 4.0b from an outflow of $0.7b in the June quarter 2009, where:
  • direct investment liabilities recorded an inflow of $8.0b, an increase of $1.5b on the inflow of $6.5b in the June quarter 2009
  • direct investment assets recorded an outflow of $4.7b, a decrease of $2.5b on the outflow of $7.2b in the June quarter 2009.

Portfolio investment recorded a net inflow of $20.0b, a decrease of $16.9b on the net inflow of $36.8b in the June quarter 2009. However, portfolio investment transactions remained high in the September quarter 2009, with inflows of $47.8b and outflows of $27.8b. Compared to the June quarter 2009, there was a decrease of $13.4b in the inflow of debt that was partially balanced by an increase of $8.2b in the inflow of equity, while outflows of debt and equity increased by $4.7b and $6.9b respectively.

Financial derivatives recorded a net outflow of $1.4b, a turnaround of $1.6b from the net inflow of $0.2b in the June quarter 2009.

Other investment recorded a net outflow of $6.2b, a decrease of $5.8b on the net outflow of $11.9b in the June quarter 2009.

Reserve assets recorded an inflow of $1.8b, a turnaround of $14.7b from the outflow of $13.0b in the June quarter 2009.


INTERNATIONAL INVESTMENT POSITION


INTERNATIONAL INVESTMENT

Australia's net international investment position at 30 September 2009 was a net foreign liability of $752.2b, up $37.2b (5%) on 30 June 2009. The increase consisted of:
  • net transactions of $17.4b
  • exchange rate changes of $10.8b
  • price changes of $9.7b
  • other changes of -$0.8b.

During the September quarter 2009 Australia's net foreign equity liabilities rose $33.8b (42%) to $114.7b. This increase was due to:
  • exchange rate changes of $16.0b
  • price changes of $11.0b
  • transactions of $6.5b
  • other changes of $0.3b.

The level of portfolio investment liabilities rose above $1 trillion in the September quarter 2009, the major contributors being debt securities transactions of $28.8b, and an increase in the value of equity liabilities of $50.5b due to price changes that reflects the strong domestic sharemarket over the quarter.

During the September quarter 2009 Australia's net foreign debt liability increased $3.3b (1%) to $637.5b. This increase was due to:
  • transactions of $10.9b
  • exchange rate changes of -$5.2b
  • price changes of -$1.3b
  • other changes of -$1.0b.


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