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5302.0 - Balance of Payments and International Investment Position, Australia, Dec 2004  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 01/03/2005   
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DECEMBER KEY FIGURES

Sep Qtr 2004
Dec Qtr 2004
Sep Qtr 2004 to Dec Qtr 2004
$m
$m
% change

TREND ESTIMATES

Balance on current account
-13,775
-15,023
-9
Balance on goods and services
-6,447
-6,727
-4
Net income
-7,239
-8,200
-13

SEASONALLY ADJUSTED

Balance on current account
-14,274
-15,174
-6
Balance on goods and services
-6,750
-6,930
-3
Net income
-7,399
-8,157
-10

ORIGINAL

Balance on current account
-15,664
-15,959
-2
Balance on capital and financial account
15,419
16,327
6

Levels at end of period

Net international investment position (IIP)
522,755
548,464
5
Net equity
115,688
126,611
9
Net debt
407,067
421,853
4

Current Account, Main aggregates - Trend estimates at current prices
Graph: Current Account Main aggregates Trend estimates at current prices

International Investment, Levels at end of period
Graph: International Investment Levels at end of period



DECEMBER KEY POINTS


BALANCE OF PAYMENTS

  • The current account deficit, seasonally adjusted, rose $900m (6%) to $15,174m. The deficit on the balance of goods and services rose $180m (3%) to $6,930m. The income deficit rose $758m (10%) to $8,157m.
  • In seasonally adjusted chain volume terms there was an increase of $1,111m (9%) in the deficit on goods and services. This could be expected to contribute -0.6 percentage points to growth in the December quarter 2004 volume measures of GDP.


INTERNATIONAL INVESTMENT POSITION
  • Australia's net IIP rose $26b to a net liability of $548b. Net foreign debt was $422b, an increase of $15b, mostly due to net debt inflows of $23b offset by exchange rate changes of -$8b, consistent with the appreciation of the Australian dollar. Net equity liabilities rose by $11b, to $127b.


NOTES

CHANGES IN THIS ISSUE

Revisions


Table 35 summarises revisions, in original current price terms, since the last issue of this publication, for the last three years and six quarters. Incorporation of the latest survey and administrative data has resulted in revisions to the current account back to September quarter 2003, increasing the 2003-04 current account deficit by $66m and the September quarter 2004 current account deficit by $487m. The financial account and international investment position have been revised back to September quarter 2003, decreasing Australia's net IIP liability as at 30 September 2004 by $780m.


Reserve Assets


Additional information is now available to be published concerning Reserve Assets in Table 25.



INQUIRIES

For further information contact Tom Jebbink on Canberra (02) 6252 5540 for balance of payments estimates, and Paul Mahoney on Canberra (02) 6252 5541 for international investment estimates.



TABLES ON AUSSTATS


TABLES AVAILABLE ON AUSSTATS

Data available on the ABS web site <www.abs.gov.au> include:

  • longer time series of all tables contained in this publication
  • additional tables as listed below:

51 Balance of payments: summary, original - Financial year


52 International investment position by net foreign equity and net foreign debt - Financial year


53 International investment position by foreign assets and foreign liabilities - Financial year


56a Goods and services: chain volume measures, original - Financial year


56b Goods and services: implicit price deflators and chain Laspeyres price indexes, original - Financial year


56c Goods and services: terms of trade, seasonally adjusted - Financial year


58 Goods credits: original - Financial year


59 Goods debits: original - Financial year


60 Goods credits: chain volume measures, original - Financial year


61 Goods debits: chain volume measures, original - Financial year


66 Goods credits: implicit price deflators (Index numbers) - Financial year


67 Goods debits: implicit price deflators (Index numbers) - Financial year


68 Services credits: original - Financial year


69 Services debits: original - Financial year


70a Services credits: current prices and chain volume measures, original - Financial year


70b Services credits: implicit price deflators (Index numbers) - Financial year


71a Services debits: current prices and chain volume measures, original - Financial year


71b Services debits: implicit price deflators (Index numbers) - Financial year


72 Income credits: original - Financial year


73 Income debits: original - Financial year


74 Current transfers: original - Financial year


75 Capital account - Financial year


76a International investment: direct investment transactions - Financial year


76b International investment: portfolio investment transactions - Financial year


77a International investment: other investment transactions, assets - Financial year


77b International investment: other investment transactions, liabilities - Financial year


77c International investment: reserve assets transactions - Financial year


77d International investment: financial derivatives transactions - Financial year


78 International investment: foreign assets by direction and type of investment - Financial year


79 International investment: foreign liabilities by direction and type of investment - Financial year


80 International investment: Australian investment abroad - Financial year


81 International investment: foreign investment in Australia - Financial year


82 International investment: levels of Australian investment abroad - Financial year


83 International investment: levels of foreign investment in Australia - Financial year


84 International investment: foreign debt transactions - Financial year


85 International investment: foreign debt levels at the end of period - Financial year


86 International investment: interest income on foreign debt - Financial year


87 International investment: currency and residual maturity of foreign debt - Financial year


88 Balance of payments: exchange rates - Financial year


89a International investment: foreign liabilities by industry - Financial year


89b International investment: foreign assets by industry - Financial year


90a Balance of payments: gross domestic product (GDP), original - Financial year


90b Balance of payments: ratios to GDP and goods and services credits, percentage change - Financial year


94 International investment position: historical summary - Financial year


95 Quarterly combined current price seasonal adjustment factors, September 1959 to September 2004


96 International investment: gross external debt liabilities: levels - Financial year


101 Merchandise exports by SITC division on a Balance of payments basis, chain volume measures


102 Merchandise exports by SITC division on a Balance of payments basis, implicit price deflators


103 Merchandise exports by SITC division and section on a Recorded trade basis, chain volume measures


104 Merchandise exports by SITC division and section on a Recorded trade basis, implicit price deflators


105 Merchandise imports by End-Use categories on a Balance of payments basis, chain volume measures


106 Merchandise imports by End-Use categories on a Balance of payments basis, implicit price deflators


107 Merchandise imports by SITC division and section on a Recorded trade basis, chain volume measures


108 Merchandise imports by SITC division and section on a Recorded trade basis, implicit price deflators


109 Services credits and debits, confidentialised version, chain volume measures


110 Services credits and debits, confidentialised version, implicit price deflators



ANALYSIS AND COMMENTS


BALANCE OF PAYMENTS


CURRENT ACCOUNT

The trend estimate of the balance on current account for the December quarter 2004 was a deficit of $15,023m, an increase of $1,248m (9%) on the deficit recorded for the September quarter 2004. The main contributors to the increase in the deficit were income debits, which rose $1,134m (10%); goods debits, which rose $885m (2%); services debits, which rose $141m (2%); and services credits which fell $21m. These effects were partly offset by increases in goods credits of $767m (3%) and income credits of $173m (4%).


In seasonally adjusted terms, the current account deficit rose $900m (6%) to $15,174m between the September and December quarters 2004. The net deficit on goods fell $54m (1%) to $6,350m. The net deficit on income rose $758m (10%) to $8,157m. The net services deficit rose $234m to $580m.


Goods and Services

The trend estimate of the balance on goods and services at current prices was a deficit of $6,727m, an increase of $280m (4%) on the September quarter 2004 deficit.


In seasonally adjusted current price terms, the balance on goods and services was a deficit of $6,930m an increase of $180m (3%) on the September quarter deficit. The deficit on goods was $6,350m, a decrease of $54m (1%) on the deficit of $6,404m in the September quarter 2004. Higher goods exports, up $284m (1%), were largely offset by higher goods imports, up $230m (1%). The increase in goods credits was driven by non-rural goods, up $884m (4%), and by other goods, up $138m (7%), partly offset by rural goods, down $738m (10%). The increase in goods debits was driven by intermediate and other merchandise goods, up $452m (3%), partly offset by capital goods, down $154m (2%), other goods, down $51m (4%), and consumption goods, down $17m.


In seasonally adjusted volume terms, the deficit on goods and services was $13,567m, an increase of $1,111m (9%) on the $12,456m deficit recorded in the September quarter 2004. The goods deficit rose $526m (5%) to $11,654m. Goods credits rose $594m (2%) while goods debits rose $1,120m (3%). The net services balance was a deficit of $1,913m, an increase of $585m on the September quarter 2004 deficit of $1,328m.


The increase of $1,111m in the deficit on goods and services in volume terms could be expected to make a contribution to growth of -0.6 percentage points to the December quarter 2004 volume measures of GDP, assuming no significant revision to the GDP chain volume estimate for the September quarter 2004.

Goods and Services(a)
Graph: Goods and Services(a)



Goods Credits

The trend estimate of goods credits rose $767m (3%) to $31,180m in the December quarter 2004. Seasonally adjusted, goods credits were $30,704m, up $284m (1%) on the September quarter 2004, driven by increases in exports of non-rural and other goods.


Rural goods (seasonally adjusted, current prices) fell $738m (10%) to $6,340m, with volumes down 7% and prices down 3%. The largest decreases were in cereal grains and cereal preparations, down $409m (23%), with volumes down 18% and prices down 6%; other rural goods, down $235m (8%), with volumes down 5% and prices down 4%; and wool and sheepskins, down $77m (10%), with volumes down 5% and prices down 6%.


Non-rural goods (seasonally adjusted, current prices) rose $884m (4%) to $22,343m, with volumes up 5% and prices down 1%. The largest increases were in other mineral fuels, up $340m (14%), with volumes up 12% and prices up 2%; coal, coke and briquettes, up $174m (5%), on increased volumes; other non-rural, up $173m (7%), on increased volumes; and other manufactures, up $155m (5%), with volumes up 5% and prices down 1%. These were partially offset by transport equipment, down $40m (3%), with volumes down 2% and prices down 1%, and metals (excluding non-monetary gold), down $23m (1%), with volumes up 1% and prices down 2%.


Other goods (seasonally adjusted, current prices) rose $138m (7%) to $2,021m, driven by a rise in non-monetary gold.

General Merchandise Credits(a)
Graph: General Merchandise Credits(a)



Goods Debits

The trend estimate of goods debits rose $885m (2%) to $37,351m in the December quarter 2004. In seasonally adjusted current price terms, goods debits rose $230m (1%) to $37,054m.


Consumption goods imports (seasonally adjusted, current prices) fell $17m to $11,469m, with a rise in volumes of 2% and a fall in prices of 2%. The largest decreases were in consumption goods n.e.s., down $82m (2%), and household electrical items, down $38m (4%), both on decreased prices. Offsetting these decreases were rises in non-industrial transport equipment, up $69m (2%), largely on increased volumes, and in toys, books and leisure goods, up $61m (7%), with volumes up 9% and prices down 2%.


Capital goods imports (seasonally adjusted, current prices) fell $154m (2%) to $8,799m, with volumes up 3% and prices down 5%. The largest decreases were in civil aircraft, down $108m (16%), with volumes down 14% and prices down 2%; telecommunications equipment, down $103m (8%), with volumes down 5% and prices down 3%; and industrial transport equipment n.e.s., down $35m (3%), with volumes down 1% and prices down 2%. Partly offsetting these decreases was a rise in imports of machinery and industrial equipment, up $80m (2%), with volumes up 8% and prices down 5%.


Intermediate and other merchandise goods (seasonally adjusted, current prices) rose $452m (3%) to $15,498m, with volumes up 4% and prices down 1%. The largest increases were in fuels and lubricants, up $338m (10%), with volumes up 4% and prices up 6%; iron and steel, up $73m (12%), with volumes up 16% and prices down 3%; and processed industrial supplies n.e.s., up $64m (2%), with volumes up 5% and prices down 2%. Partly offsetting these increases was a fall in other merchandise goods, down $44m (15%), with volumes down 13% and prices down 3%.


Other goods (seasonally adjusted, current prices) fell $51m (4%) to $1,288m.

General Merchandise Debits(a)
Graph: General Merchandise Debits(a)



Services

The trend estimate of net services was a deficit of $556m, a rise of $162m on the September quarter 2004 deficit of $394m. In seasonally adjusted terms, net services recorded a deficit of $580m, a rise of $234m on the September quarter 2004.


Services credits, in seasonally adjusted terms at current prices, fell $18m to $8,479m, with a fall in volumes of 1% offset by a 1% increase in prices. An increase in travel services credits was offset by decreases in transportation and other services. Services debits, in seasonally adjusted terms at current prices, rose $216m (2%) to $9,059m, with volumes up 5% and prices down 3%. The largest increase in services debits was in freight transportation services, due mainly to increased freight volumes.


Seasonally adjusted, tourism related services credits fell $57m (1%) to $5,231m while tourism related services debits rose $170m (4%) to $4,618m.


Implicit Price Deflator

In seasonally adjusted terms, the implicit price deflator (IPD) for total goods and services credits fell 0.6%. In original terms, it fell by 1.1%. The chain Laspeyres price index for goods and services credits fell 0.8%, indicating that the compositional effects had a downward influence on the movement in the IPD. The IPD for goods credits fell 1.1% and the IPD for services credits rose 1.0%.


The total goods and services debits IPD fell 2.2% in seasonally adjusted terms. In original terms, it fell by 2.1%. The chain Laspeyres price index for debits fell 1.8%.

IMPLICIT PRICE DEFLATOR(a)
Graph: IMPLICIT PRICE DEFLATOR(a)



Relationship to IPI and EPI

In original terms, the implicit price deflator for total goods credits fell 1.6%. The chain Laspeyres price index for goods exports fell 1.3%. The export price index (EPI) fell 1.6% between the September and December quarters 2004.


Between the September and December quarters 2004, the goods imports IPD (in original terms) fell 1.9% and the chain Laspeyres price index for goods imports fell 1.7%. The import price index (IPI) fell 1.9%.


Terms of trade

Australia's seasonally adjusted terms of trade rose 1.6% to 115.2, with a decrease of 0.6% in the IPD for goods and services credits and a 2.2% decrease in the goods and services debits IPD. The trend estimate of the terms of trade increased 1.8% to 115.3.


Income

The trend estimate of the net income deficit rose $961m (13%) to $8,200m. In seasonally adjusted terms, the net income deficit rose $758m (10%) to $8,157m. Income credits rose $125m (3%) to $4,734m and income debits rose $883m (7%) to $12,891m.


In original terms, income credits rose $372m (8%) to $4,851m and income debits rose $69m (1%) to $12,485m.

Net Income
Graph: Net Income



Current Transfers

In seasonally adjusted terms, the net current transfers deficit was $87m, a decrease of $38m on the $125m deficit recorded in the September quarter 2004. Current transfer credits fell $8m (1%) and current transfer debits fell $46m (4%).



CAPITAL AND FINANCIAL ACCOUNT

Capital Account

In original terms, the capital account surplus was $259m, down $90m (26%) on the September quarter 2004 surplus. Capital transfer credits fell $68m (9%) to $663m, while capital transfer debits rose $35m (10%) to $390m.


Financial Account

In original terms, the balance on financial account recorded a net inflow of $16.1b, with a $23.1b inflow of debt and a $7.0b outflow of equity.


Direct investment in Australia recorded an inflow of $53.0b in the December quarter 2004, an increase of $50.6b on the September quarter inflow of $2.4b. Australia's direct investment abroad recorded an outflow of $14.7b, up from the previous quarter's outflow of $1.5b. This was the sixteenth consecutive quarterly outflow, bringing the total outflow on Australia's direct investment abroad to $83.6b since the March quarter 2001.


Portfolio investment recorded a net outflow of $34.4b, a turnaround of $56.0b from the net inflow of $21.5b recorded in the September quarter 2004.


Other investment recorded a net inflow of $18.9b, a turnaround of $33.8b on the net outflow of $14.9b recorded in the September quarter 2004.


Reserve assets recorded a net outflow of $6.9b, a turnaround of $14.0b on the previous quarter's inflow of $7.1b, due to an increase in foreign exchange reserves.



INTERNATIONAL INVESTMENT POSITION


INTERNATIONAL INVESTMENT

Australia's net international investment position at 31 December 2004 was a net foreign liability of $548.5b, up $25.7b (4.9%) on 30 September 2004. The increase consisted of:

  • net transactions of $16.1b
  • price changes of $4.6b
  • exchange rate changes of $5.0b
  • other adjustments of $0.1b.

During the December quarter 2004, the level of net debt liabilities rose $14.8b (3.6%) to $421.9b. Net debt raisings of $23.1b were offset by exchange rate changes of -$7.6b and price changes of -$1.7b.


During the December quarter 2004, the level of net equity liabilities rose $10.9b (9.4%) to $126.6b, reflecting exchange rate changes of $12.6b and price changes of $6.3b, offset by transactions of -$7.0b.



CALENDAR YEAR: 2004 SITUATION


BALANCE OF PAYMENTS

In original terms, the balance on current account was a deficit of $53.8b for the calendar year 2004, an increase of $7.5b (16%), on the deficit recorded for 2003.


The increase in the current account deficit was largely due to an increase of $5.5b in net income, from a deficit of $22.2b in 2003 to $27.7b in 2004. Net goods recorded a deficit of $24.4b in the calendar year 2004, an increase of $1.1b on the deficit recorded for 2003 and net services recorded a deficit of $1.3b in the calendar year 2004, an increase of $0.8b on the deficit recorded for 2003.


In 2004, the net income deficit increased $5.5b (25%), with a $2.5b (16%) increase in income credits offset by a $7.9b (21%) increase in income debits. The increase in income credits was due to increases in other investment income, while the increase in income debits was due to rising income on direct and other investment in Australia.


Goods exports increased $10.0b (9%) and goods imports increased $11.1b (8%). The largest increases in goods exports were in:

  • coal, coke and briquettes, up $2.6b (24%), to $13.5b
  • cereal grains and cereal preparations, up $2.6b (70%), to $6.2b
  • metal ores and minerals, up $2.2b (15%) to $16.6b.

For imports of goods, the largest increases were in:
  • fuels and lubricants, up $2.8b (29%), to $12.7b
  • consumption goods n.e.s., up $1.9b (16%), to $14.2b
  • machinery and industrial equipment, up $1.7b (15%), to $12.4b
  • processed industrial supplies n.e.s., up $1.0b (8%), to $13.1b.

Services exports rose $1.7b (5%) and services imports rose $2.5b (8%).


In original terms, the balance on financial account recorded a net inflow of $53.2b in 2004, an increase of $9.0b (20.3%) on the net inflow of $44.3b in 2003. The increased inflow was due to a $47.2b turnaround in net direct investment and reserve assets of $9.0b. The impact of this increase on the financial account was partially offset by:

  • a decrease of $38.9b in net portfolio investment, from an inflow of $61.3b to $22.4b
  • a turnaround of $7.8b in other investment, from an inflow of $4.8b to an outflow of $3.0b.


INTERNATIONAL INVESTMENT POSITION

Australia's net international investment position at 31 December 2004 was a net foreign liability of $548.5b. This was up $70.7b (14.8%) on the position a year earlier as a result of:
  • net transactions of $53.2b
  • price changes of $20.0b
  • exchange rate changes of -$2.6b
  • other adjustments of $0.1b.

During the 2004 calendar year, the level of net debt rose $51.7b (14.0%) to $421.9b. This was attributable to net transactions of $63.8b and other changes of $0.6b. These increases were partially offset by price changes of -$7.0b and exchange rate variations of -$5.9b. Net equity liabilities rose $19.1b (17.7%), attributable to price changes of $26.9b, exchange rate effects of $3.3b, offset by net transactions of -$10.6b and other changes of -$0.5b.

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