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5302.0 - Balance of Payments and International Investment Position, Australia, Dec 2009  
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ANALYSIS AND COMMENTS


BALANCE OF PAYMENTS


CURRENT ACCOUNT

The trend estimate of the balance on current account for the December quarter 2009 was a deficit of $17,509m in current price terms. This was an increase of $2,922m (20%) on the deficit recorded for the September quarter 2009 where:

  • the goods and services deficit rose $3,004m to $6,349m
  • the primary income deficit fell $54m to $10,973m
  • the secondary income deficit fell $27m (13%) to $188m.

In seasonally adjusted current price terms, the current account deficit rose $2,728m (19%) to $17,459m between the September quarter 2009 and December quarter 2009 where:
  • the goods and services deficit rose $1,838m to $6,062m
  • the primary income deficit rose $964m (9%) to $11,234m
  • the secondary income deficit fell $75m (32%) to $163m.


Goods and Services

The trend estimate of the balance on goods and services at current prices was a deficit of $6,349m, an increase of $3,004m on the September quarter 2009 deficit.

In seasonally adjusted terms, the balance on goods and services was a deficit of $6,062m, an increase of $1,838m on the September quarter 2009 deficit where:
  • the net goods deficit rose $1,404m to $5,715m
  • net services fell $434m resulting in a deficit of $347m.

The increase in the goods deficit resulted from a decrease in goods credits (exports), down $377m (1%) and an increase in goods debits (imports), up $1,025m (2%).

Contributing to the decrease in goods credits were:
  • rural goods, down $349m (6%)
  • non-rural goods, down $298m (1%).

Partly offsetting these decreases was non-monetary gold, up $311m (10%).

Contributing to the increase in goods debits were:
  • intermediate and other merchandise goods, up $706m (3%)
  • non-monetary gold, up $231m (15%)
  • capital goods, up $107m (1%).

The services deficit resulted from an increase in services debits, up $546m (4%) exceeding the increase in services credits, up $112m (1%).

In seasonally adjusted volume terms, the balance on goods and services was a deficit of $7,750m, an increase of $3,790m on the September quarter 2009 deficit. The net deficit on goods increased $2,537m. Goods credits rose $1,003m (2%) and goods debits rose $3,540m (7%). The net services balance was a deficit of $1,462m, an increase of $1,254m on the September quarter 2009 deficit.

The increase of $3,790m in the deficit on goods and services in volume terms is expected to detract 1.3 percentage points from growth in the December quarter 2009 volume measure of GDP, assuming no significant revision to the GDP chain volume estimate for the September 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 $2,527m (6%) to $43,394m in the December quarter 2009.

In seasonally adjusted terms at current prices, goods credits fell $377m (1%) to $45,007m.

Exports of rural goods, in seasonally adjusted terms at current prices, fell $349m (6%) to $5,874m, with volumes down 5% and prices down 1%. The decreases were in:
  • cereal grains and cereal preparations, down $203m (15%), with volumes down 3% and prices down 12%
  • meat and meat preparations, down $152m (9%), with volumes down 6% and prices down 4%
  • other rural, down $115m (4%), with volumes down 8% and prices up 4%.

These decreases were partly offset by the wool and sheepskins component, up $122m (27%), with volumes up 14% and prices up 12%.

Exports of non-rural goods, in seasonally adjusted terms at current prices, fell $298m (1%) to $35,693m, with volumes up 3% and prices down 4%. The largest decreases were in:
  • coal, coke and briquettes, down $878m (10%), with volumes up 1% and prices down 11%
  • other manufactures, down $106m (3%), with volumes down 1% and prices down 1%.

These decreases were partly offset by:
  • other mineral fuels, up $484m (12%), with volumes up 6% and prices up 6%
  • other non-rural (incl. sugar and beverages), up $216m (8%), with volumes up 11% and prices down 3%.

Net exports of goods under merchanting, in seasonally adjusted terms at current prices, fell $41m (34%) to $81m, with volumes down 31% and prices down 4%.

Exports of non-monetary gold, in both original and seasonally adjusted terms at current prices, rose $311m (10%) to $3,359m, with volumes up 6% and prices up 4%.

Goods Credits, CHAIN VOLUME MEASURES (a)
Graph: Goods Credits, CHAIN VOLUME MEASURES (a)



Goods Debits

The trend estimate of goods debits at current prices rose $311m (1%) to $49,559m in the December quarter 2009.

In seasonally adjusted terms at current prices, goods debits rose $1,025m (2%) to $50,721m.

Imports of consumption goods, in seasonally adjusted terms at current prices, fell $18m to $15,174m, with volumes up 4% and prices down 4%. The largest decreases were in:
  • textiles, clothing and footwear, down $212m (11%), with volumes down 2% and prices down 9%
  • food and beverages, mainly for consumption, down $120m (5%), with prices down 5%
  • household electrical items, down $90m (6%), with prices down 6%.

Partly offsetting these decreases was the non-industrial transport equipment component, up $529m (15%), with volumes up 18% and prices down 2%.

Imports of capital goods, in seasonally adjusted terms at current prices, rose $107m (1%) to $11,791m, with volumes up 8% and prices down 7%. The largest increases were in:
  • industrial transport equipment n.e.s., up $186m (13%), with volumes up 21% and prices down 7%
  • capital goods n.e.s., up $80m (3%).

Partly offsetting these increases was the machinery and industrial equipment component, down $114m (3%), with volumes up 2% and prices down 5%.

Imports of intermediate and other merchandise goods, in seasonally adjusted terms at current prices, rose $706m (3%) to $21,979m, with volumes up 8% and prices down 5%. The largest increases were in:
  • fuels and lubricants, up $252m (4%), with volumes up 6% and prices down 2%
  • goods procured in ports by carriers, up $219m (63%), with volumes up 75% and prices down 7%
  • processed industrial supplies, up $122m (3%), with volumes up 9% and prices down 6%.

Imports of non-monetary gold, in both original and seasonally adjusted terms at current prices, rose $231m (15%) to $1,778m, with volumes up 9% and prices up 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 $184m, an increase of $166m on the revised September quarter 2009 deficit of $18m.

In seasonally adjusted terms at current prices, net services recorded a deficit of $347m, a turnaround of $434m on the September quarter 2009 surplus of $87m.

Services credits, in seasonally adjusted terms at current prices, rose $112m (1%) to $13,372m. The largest increases were in:
  • other services, up $103m (3%), with volumes up 3%
  • transport services, up $27m (2%), with volumes down 1% and prices up 3%.

Services debits, in seasonally adjusted terms at current prices, rose $546m (4%) to $13,719m. The largest increases were in:
  • travel services, up $395m (7%), volumes up 13% and prices down 6%
  • transport services, up $107m (3%), volumes up 5% and prices down 1%
  • other services, up $53m (1%), volumes up 9% and prices down 7%.

Seasonally adjusted at current prices, tourism related services credits rose $6m to $8,962m, and tourism related services debits rose $430m (6%) to $7,469m.


IMPLICIT PRICE DEFLATOR(footnote 1)

In seasonally adjusted terms, the implicit price deflator (IPD) for total goods and services credits fell 2.1%. In original terms, it decreased 2.1% and the chain Laspeyres price index for goods and services credits fell 1.9%. In original terms, the IPD for goods credits fell 3.0% and the IPD for services credits rose 0.9%.

The total goods and services debits IPD fell 4.8% in seasonally adjusted terms. In original terms, it decreased 4.8% and the chain Laspeyres price index for goods and services debits fell 4.5%. In original terms, the IPD for goods debits fell 4.8% and the IPD for services debits fell 5.1%.

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 3.0% and the chain Laspeyres price index for goods exports fell 2.7%. The export price index (EPI) fell 1.7% during the December quarter 2009.

The difference between the EPI and IPD is mainly driven by coal, coke and briquettes. 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 4.8% and the chain Laspeyres price index for goods imports fell 4.5%. The import price index (IPI) fell 4.3% during the December quarter 2009.


Terms of Trade

Australia's seasonally adjusted terms of trade rose 2.9% to 102.5, with a decrease of 2.1% in the IPD for goods and services credits and a decrease of 4.8% in the goods and services debits IPD. The trend estimate of the terms of trade increased 0.4% to 100.6.


Primary Income

The trend estimate of the net primary income deficit decreased $54m to $10,973m in the December quarter 2009.

In seasonally adjusted terms the net primary income deficit increased $964m (9%) to $11,234m. Income credits increased $75m (1%) to $9,813m and income debits increased $1,039m (5%) to $21,047m.

The main contributor to the increase in income credits was an increase of $236m (5%) in income on direct investment assets, which was partially offset by a decrease of $117m (3%) in income on portfolio investment assets and a decrease of $39m (11%) in income on other investment assets.

The main contributors to the increase in income debits were a $884m (11%) increase in income on direct investment liabilities, a $125m (1%) increase in income on portfolio investment liabilities and a $64m (8%) increase in compensation of employees.

In original terms, the primary income deficit decreased $590m (5%) to $10,898m in the December quarter 2009. Primary income credits increased $177m (2%) to $9,672m . Primary income debits decreased $413m (2%) to $20,570m.

NET PRIMARY INCOME
Graph: NET PRIMARY INCOME



Secondary Income

In seasonally adjusted terms, the net secondary income balance was a deficit of $163m, a decrease of $75m (32%) on the revised September quarter 2009 deficit of $238m. Secondary income credits rose $23m (1%) and secondary income debits fell $51m (3%) in the December quarter 2009.


CAPITAL ACCOUNT

In original terms, the capital account deficit was $35m, up $5m on the September quarter 2009 deficit of $30m, with capital transfers debits up $3m to $35m.


FINANCIAL ACCOUNT

The balance on financial account recorded a net inflow of $18.0b, with a net outflow of $13.1b of equity and a $31.1b net inflow of debt.

The financial account surplus increased $1.5b from $16.5b in the September quarter 2009 to $18.0b in the December quarter in line with the increase in the current account deficit, which increased $2.2b from $16.3b last quarter to $18.5b this quarter.

Net debt issued increased $7.3b from $29.7b in the September quarter 2009 to $37.0b in the December quarter. The main contributors to this increase were deposit-taking corporations, except the central bank, sector, which contributed $8.4b, and other sectors which had a turnaround in long-term debt issuance, contributing $3.5b. The general government sector partially offset this, with issues decreasing $4.6b in December quarter 2009.

Direct investment recorded a net inflow of $7.7b in the December quarter 2009, an increase of $3.8b from the net inflow of $3.9b in the September quarter 2009 where:
  • direct investment liabilities recorded an inflow of $13.8b, an increase of $4.6b on the inflow of $9.2b in the September quarter 2009
  • direct investment assets recorded an outflow of $6.1b, an increase of $0.8b on the outflow of $5.3b in the September quarter 2009.

Portfolio investment recorded a net outflow of $0.3b, a turnaround of $22.2b on the inflow of $21.9b in the September quarter 2009. This was driven by a net outflow due to equity and investment fund shares of $23.4b, offset by a net inflow of $23.1b due to debt securities.

Financial derivatives recorded a net outflow of $2.2b, an increase from a net outflow of $1.3b in the September quarter 2009.

Other investment recorded a net inflow of $11.5b, a turnaround of $21.3b from a net outflow of $9.8b in the September quarter 2009.


INTERNATIONAL INVESTMENT POSITION


INTERNATIONAL INVESTMENT

Australia's net international investment position at 31 December 2009 was a net foreign liability of $768.6b, up $12.4b (2%) on 30 September 2009. The increase consisted of:
  • net transactions of $18.0b
  • exchange rate changes of $1.8b
  • price changes of -$5.6b
  • other changes of -$1.8b.

During the December quarter 2009 Australia's net foreign equity liabilities fell $1.8b (1%) to $120.8b. This fall was due to:
  • exchange rate changes of $9.7b
  • price changes of $3.7b
  • net transactions of -$13.1b
  • other changes of -$2.0b.

During the December quarter 2009 Australia's net foreign debt liability increased $14.2m (2%) to $647.9b. This increase was due to:
  • transactions of $31.1b
  • other changes of $0.2b
  • price changes of -$9.3b
  • exchange rate changes of -$7.9b.


CALENDAR YEAR 2009 SITUATION


BALANCE OF PAYMENTS

In original terms, the balance on current account for calendar year 2009 was a deficit of $52.1b, a 5% decrease on the deficit of $54.8b recorded for 2008. The balance on goods and services deficit was $7.5b, a decrease of $1.6b on the deficit of $9.1b recorded in 2008. Goods exports decreased $27.9b (12%), goods imports decreased $25.2b (11%), services exports increased $0.4b (1%) and services imports decreased $3.9b (7%).

The 2009 net primary income deficit fell $1.6b (3%), with a decrease in income credits of $6.8b (15%) and a decrease in income debits of $8.4b (9%).

The balance on financial account recorded a net inflow of $51.8b, with a net inflow on debt of $19.3b and a net inflow on equity of $32.5b. This result was down $3.9b on the net inflow recorded for 2008 as a result of:
  • an increase of $55.0b on the net inflow on portfolio investment
  • a turnaround of $41.9b to a net outflow on other investment
  • a decrease of $8.8b on the net inflow on direct investment
  • an increase of $7.4b on the net outflow on reserve assets
  • an increase of $0.8b on the net outflow on financial derivatives.


INTERNATIONAL INVESTMENT POSITION

Australia's net international investment position as at 31 December 2009 was a net foreign liability of $768.6b. This was up $54.7b (8%) on the position a year earlier as a result of:
  • net transactions of $51.8b
  • exchange rate changes of $33.4b
  • price changes of -$26.6b
  • other adjustments of -$3.8b.

During 2009 calendar year, the level of net equity liabilities increased to $120.7b, up $103.3b (591%) on the previous year with exchange rate changes of $76.5b, transactions of $32.5b and price changes of $0.3b partially offset by other changes of -$6.1b.

Net foreign debt liability fell to $647.9b, down $48.5b (7%) on the previous year, with exchange rate changes of -$43.2b and price changes of -$26.9b. These were partially offset by transactions of $19.3b and other changes of $2.2b.

At 31 December 2009, the ratio of Australia's net international investment position to GDP using the latest available GDP figure (for the year ended 30 September 2009 using current prices) was 61.4%. This compares with 57.7% one year ago and 51.2% one decade ago.

1 In this commentary movements in indexes are based on data to four decimal places. <back

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