5302.0 - Balance of Payments and International Investment Position, Australia, Sep 2010 
Quality Declaration
Quality Declaration ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 30/11/2010
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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 $68m, a turnaround of $1,457m on the June quarter 2010 surplus. The net surplus on goods decreased $1,036m (25%). Goods credits decreased $1,802m (3%) and goods debits decreased $766m (1%). The net deficit on services increased $422m (15%) on the June quarter 2010 deficit of $2,818m. The turnaround in the balance on goods and services to a deficit, in seasonally adjusted chain volume terms, is expected to detract 0.4 percentage points from growth in the September quarter 2010 volume measure of GDP, assuming no significant revision to the GDP chain volume estimate for the June quarter 2010. Terms of Trade and Implicit Price Deflator Australia's seasonally adjusted terms of trade rose 0.8% to 108.6 with an increase of 1.2% in the implicit price deflator (IPD) for goods and services credits and an increase of 0.4% in the IPD for goods and services debits. The trend estimate of the terms of trade for net goods and services increased 1.6% to 109.2. Goods The trend estimate of net goods at current prices was a surplus of $7,032m, an increase of $1,104m (19%) on the June quarter 2010 surplus of $5,928m. In seasonally adjusted terms at current prices, net goods recorded a surplus of $6,539m, a decrease of $508m (7%) on the June quarter 2010 surplus of $7,047m.
Services
GOODS CREDITS The trend estimate of goods credits at current prices rose $2,158m (4%) to $60,998m in the September quarter 2010. In seasonally adjusted terms at current prices, goods credits fell $944m (2%) to $60,294m. Rural Goods Exports of rural goods, in seasonally adjusted terms at current prices, rose $355m (5%) to $7,174m, with volumes up 7% and prices down 2%. The components contributing to the increase were:
Non-rural Goods Exports of non-rural goods, in seasonally adjusted terms at current prices, rose $15m to $49,810m, with volumes down 2% and prices up 2%. The main component contributing to the increase was other non-rural (including sugar and beverages), up $285m (9%), with volumes up 14% and prices down 5%. Components partly offsetting this increase were:
Net Exports of Goods Under Merchanting Net exports of goods under merchanting, in seasonally adjusted terms at current prices, rose $12m (17%) to $83m, with volumes up 16% and prices up 2%. Non-monetary Gold Exports of non-monetary gold, in seasonally adjusted terms at current prices, fell $1,326m (29%) to $3,227m, with volumes down 28% and prices down 1%. This followed a 36% increase in the June quarter 2010. GOODS DEBITS The trend estimate of goods debits at current prices rose $1,054m (2%) to $53,965m in the September quarter 2010. In seasonally adjusted terms at current prices, goods debits fell $436m (1%) to $53,755m. Consumption Goods Imports of consumption goods, in seasonally adjusted terms at current prices, rose $222m (1%) to $16,521m, with volumes up 2%. The main components contributing to the increase were:
Partly offsetting these increases was the non-industrial transport equipment component, down $267m (6%), with volumes down 5% and prices down 1%. Capital Goods Imports of capital goods, in seasonally adjusted terms at current prices, fell $465m (4%) to $11,980m with volumes down 4%. The main components contributing to the decrease were:
Partly offsetting these decreases was the telecommunications equipment component, up $179m (11%) with volumes up 10% and prices up 1%. Intermediate and Other Merchandise Goods Imports of intermediate and other merchandise goods, in seasonally adjusted terms at current prices, rose $963m (4%) to $24,032m, with volumes up 2% prices up 2%. The main components contributing to the increase were:
Partly offsetting these increases was the fuels and lubricants component, down $350m (5%) with volumes down 4% and prices down 1%. Non-monetary Gold Imports of non-monetary gold, in seasonally adjusted terms at current prices, fell $1,156m (49%) to $1,221m, with volumes down 49% and prices up 1%. This followed a 68% increase in the June quarter 2010. SERVICES The trend estimate of net services at current prices was a deficit of $724m, an increase of $167m (30%) on the June quarter 2010 deficit of $557m. In seasonally adjusted terms at current prices, net services recorded a deficit of $766m, an increase of $289m (61%) on the June quarter 2010 deficit of $477m. Services Credits Services credits, in seasonally adjusted terms at current prices, rose $29m to $13,329m, with volumes down 1% and prices up 1%. The main components contributing to the increase were:
Partly offsetting these increases was the travel component, down $40m, with volumes down 1% and prices up 1%. In seasonally adjusted terms tourism related service credits rose $2m to $9,027m. Services Debits Services debits, in seasonally adjusted terms at current prices, rose $318m (2%) to $14,095m, with volumes up 2%. The main components contributing to the increase were:
Partly offsetting these increases was the maintenance and repair services n.i.e. component, down $27m (35%), with volumes down 35% . In seasonally adjusted terms tourism related service debits rose $285m (4%) to $7,612m. PRIMARY INCOME The trend estimate of the net primary income deficit at current prices increased $2m in the September quarter 2010 to $12,586m. In seasonally adjusted terms, the net primary income deficit increased $1,663m (14%) in the September quarter 2010 to $13,166m. In original terms, the primary income deficit increased $3,444m (31%) to $14,611m in the September quarter 2010. Primary income credits decreased $635m (6%) to $9,401m and primary income debits increased $2,809m (13%) to $24,012m. Primary Income Credits Primary income credits, in seasonally adjusted terms at current prices, decreased $391m (4%) to $9,560m. The main contributors to the decrease were:
Primary Income Debits Primary income debits, in seasonally adjusted terms at current prices, increased $1,271m (6%) to $22,725m. The main contributors to the increase were:
The above increases were partly offset by:
SECONDARY INCOME The trend estimate of the net secondary income deficit at current prices, increased $13m (3%) in the September quarter 2010 to $462m. In seasonally adjusted terms the net secondary income deficit decreased $41m (9%) in the September quarter 2010 to $438m. FINANCIAL ACCOUNT The balance on financial account, in original terms, recorded a net inflow of $9.0b, with a net inflow of $18.0b of debt and a net outflow of $8.9b of equity. The financial account surplus increased $5.7b from $3.4b in June quarter 2010 to $9.0b in September 2010, in line with the increase in the current account deficit which rose $5.8b from $3.5b last quarter to $9.3b this quarter. Direct investment recorded a net outflow of $6.5b in September quarter 2010, an increase of $4.9b from the net outflow of $1.6b in June quarter 2010, where:
Portfolio investment recorded a net inflow of $19.3b, an increase of $2.8b on the net inflow of $16.5b in June quarter 2010. This was driven by:
Portfolio liabilities debt securities, decreased marginally by $0.1b from $21.4b in the June quarter 2010 to $21.2b in the September quarter 2010. Financial derivatives recorded a net inflow of $6.3b, a turnaround of $11.5b from the net outflow of $5.2b in the June quarter 2010. The main contributor was deposit-taking corporations, except the central bank, with a net inflow $5.9b. Other investment recorded a net outflow of $7.8b, an increase of $1.8b from the net outflow of $6.0b in the June quarter 2010. Reserve assets recorded a net outflow of $2.2b, an increase of $1.9b from the net outflow of $0.3b in the June quarter 2010. INTERNATIONAL INVESTMENT POSITION ANALYSIS Australia's net international investment position at 30 September 2010 was a net foreign liability of $771.3b, up $4.2b (1%) on the 30 June 2010 position of $767.1b. The changes contributing to this result are shown in the following table.
SUPPLEMENTARY INFORMATION CONDITIONS The conditions in the global economy continued to improve in the September quarter 2010. According to the Organisation for Economic Cooperation and Development (OECD), preliminary real GDP estimates in seasonally adjusted terms showed positive quarterly growth for: UK (0.8%), Germany (0.7%), USA (0.5%), Italy (0.2%) and total EU (0.4%). Australia's international investment activities increased moderately during the quarter. Foreign asset and liability transactions were -$11.5b and $20.6b in the September quarter 2010, compared to -$16.8b and $20.2b respectively in the June quarter 2010. The Australian share market, as measured by the MSCI global index, increased 6.4% in September quarter 2010, a turnaround from the 12.6% decrease in June quarter 2010. There were increases in all major markets: Hong Kong 20.7%, Europe ex. UK 18.9%, UK 12.8%, USA 9.2%, France 8.2%, Singapore 8.1%, Canada 7.8%, Germany 4.7% and Switzerland 2.6%. The world index increased 12.3%. This is reflected in the price changes of -$54.6b in foreign assets and $33.3b in foreign liabilities during September quarter 2010. According to Reuters, the composite corporate benchmark yield decreased in the UK ( 6.2% to 5.5%), the USA ( 5.1% to 4.6%), Germany (3.5% to 3.2%) and Japan (1.3% to 1.1%). Long term government bond yields decreased in all major markets over September quarter 2010. The 10 year government bond yields decreased from 3.0% to 2.5% in the US, 3.4% to 3.0% in the UK, 2.6% to 2.3% in Germany, 1.1% to 0.9% in Japan and 5.3% to 5.0% in Australia. This is reflected in the market price changes increasing for both portfolio debt securities liabilities ($1.0b) and assets ($2.3b) in the September quarter 2010. The AUD appreciated against most of the major currencies in the September quarter 2010. It increased against the USD (13.4%), the Hong Kong dollar (13.1%), the Chinese Renminbi (11.8%), the Canadian Dollar (11.3%), the UK pound sterling (7.6%), Japanese yen (6.8%), the New Zealand dollar (6.7%) and Euro (2.0%). The Trade Weighted Index (TWI) recorded an increase of 8.3%. The net impact of exchange rate changes was a decrease of $64.4b and $46.5b 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 1.5% and the chain Laspeyres price index for goods exports rose 1.4%. The export price index (EPI) rose 7.8% during the September quarter 2010. The difference between the EPI and IPD is mainly driven by two components. In the metal ores and minerals component the unit value of a number of transactions decreased significantly in merchandise trade data, reflecting a change in the quality of some of the metal ores and minerals being exported. This is reflected in the IPD. The EPI prices items to constant quality, meaning that any element of price change attributable to a change in quality is removed. As a result, in the EPI the price of metal ores and minerals increased in September quarter 2010 in excess of the IPD. The EPI and IPD for the coal components varied 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 0.5% and the chain Laspeyres price index for goods imports rose 0.8%. The import price index (IPI) rose 0.7% during the September quarter 2010.
Commodity Price Indexes The RBA Commodity Price Index (average monthly index) for rural commodities increased 8.8% between the June and September quarters 2010 while the EPI for rural goods total increased 2.3%. The RBA Commodity Price Index for non-rural commodities increased 4.1% while the EPI for non-rural goods total (excluding non-monetary gold) increased 9.4%. 1 In this commentary movements in indexes are based on data to four decimal places. <back Document Selection These documents will be presented in a new window.
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