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5302.0 - Balance of Payments and International Investment Position, Australia, Mar 2006  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 06/06/2006   
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Due to a technical problem the time series spreadsheet for table 24 has been reissued.


MARCH KEY FIGURES

Dec Qtr 2005
Mar Qtr 2006
Dec Qtr 2005 to Mar Qtr 2006
$m
$m
% change

TREND ESTIMATES

Balance on current account
-13 903
-14 223
-2
Balance on goods and services
-4 252
-4 404
-4
Net income
-9 536
-9 708
-2

SEASONALLY ADJUSTED

Balance on current account
-14 330
-13 999
2
Balance on goods and services
-4 174
-4 676
-12
Net income
-10 037
-9 227
8

ORIGINAL

Balance on current account
-13 963
-13 305
5
Balance on capital and financial account
13 289
13 701
3

Levels at end of period

Net international investment position (IIP)
558 555
571 042
2
Net equity
86 748
77 563
-11
Net debt
471 807
493 480
5

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

International Investment
Graph: International Investment



MARCH KEY POINTS


BALANCE OF PAYMENTS

  • The current account deficit, seasonally adjusted, fell $331m (2%) to $13,999m. The deficit on the balance of goods and services rose $502m (12%) to $4,676m. The income deficit fell $810m (8%) to $9,227m.
  • In seasonally adjusted chain volume terms there was an increase of $28m in the deficit on goods and services. This could be expected to marginally detract from growth in the March quarter 2006 volume measures of GDP.


INTERNATIONAL INVESTMENT POSITION
  • Australia's net IIP rose $12b to a net liability position of $571b. Net foreign debt was $493b, an increase of $22b, due mostly to net debt inflows of $18b and exchange rate changes of $6b, consistent with the depreciation of the Australian dollar. Net foreign equity liabilities fell by $9b to $78b.


NOTES

FORTHCOMING ISSUES

ISSUE (QUARTER) Release Date
June 2006 1 September 2006
September 2006 5 December 2006



REVISIONS

Table 36 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 2004, increasing the 2004-05 current account deficit by $27m and increasing the December quarter 2005 current account deficit by $115m. The financial account and international investment position have been revised back to September quarter 2004 decreasing Australia's net IIP liability as at 30 December 2005 by $1,616m.



CHANGES IN THIS ISSUE

There are no changes in this issue.



INQUIRIES

For further information contact Bernard Williams on Canberra (02) 6252 5540 for balance of payments estimates, and Joe Whelan on Canberra (02) 6252 5541 for international investment estimates.



TABLES ON AUSSTATS


TABLES AVAILABLE ON AUSSTATS

Data available free 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 by equity and debt - Financial year


54 International investment position by foreign liabilities by equity and debt - Financial year


56 Goods and services: terms of trade, original - Financial year


57 Goods credits: original - Financial year


58 Goods debits: original - Financial year


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


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


65 Services credits: original - Financial year


66 Services debits: original - Financial year


68 Services credits: chain volume measures and implicit price deflators (Index numbers) - Financial year


69 Services debits: chain volume measures and implicit price deflators (Index numbers) - Financial year


70 Income credits: original - Financial year


71 Income debits: original - Financial year


73 Current transfers: original - Financial year


74 Capital account - Financial year


75 Financial Account - Financial year


76 International investment: Australian investment abroad - Financial year


77 International investment: foreign investment in Australia - Financial year


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


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


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


81 International investment: gross external debt liabilities - Financial year


83 Balance of payments: exchange rates - Financial year


84 International investment: foreign assets and liabilities: by Industry - Financial year


85 Balance of payments: ratios of current account measures to GDP - Financial year


89 International investment position: historical summary - Financial year


95 Quarterly combined current price seasonal adjustment factors


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


111 Balance of payments: current account transactions, seasonally adjusted and trend estimates (percentage change) - Quarter


112 Balance of payments: goods and services, implicit price deflators, original (index) - Quarter


113 Balance of payments: original and seasonally adjusted chain volume measures and indexes (percentage change) - Quarter


114 Balance of payments: goods credits, chain volume measures, original - Quarter


115 Balance of payments: goods debits, chain volume measures, original - Quarter


116 Balance of payments: services credits and debits, current prices, original and seasonally adjusted - Quarter


117 International investment: foreign assets, by direction and type of investment - Quarter


118 International investment: foreign liabilities, by direction and type of investment - Quarter


119 International investment: foreign debt transactions - Quarter


120 International investment: interest income on foreign debt - Quarter


214 Balance of payments: goods credits, chain volume measures, original - Financial year


215 Balance of payments: goods debits, chain volume measures, original - Financial year


216 Balance of payments: services credits and debits, current prices, original and seasonally adjusted - Financial year


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


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


219 International investment: foreign debt transactions - Financial year


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



ANALYSIS AND COMMENTS


BALANCE OF PAYMENTS


CURRENT ACCOUNT

The trend estimate of the balance on current account for the March quarter 2006 was a deficit of $14,223m, an increase of $320m (2%) on the deficit recorded for the December quarter 2005. The main contributors to the increase in the deficit were goods debits which rose $1,301m (3%) and income debits which rose $384m (3%) partly offset by goods credits which rose $1,016m (3%) and income credits which rose $212m (4%).


In seasonally adjusted terms, the current account deficit fell $331m (2%) to $13,999m between the December quarter 2005 and March quarter 2006 where:

  • the net income deficit fell $810m (8%) to $9,227m
  • the net services deficit turned around by $380m to a surplus of $90m
  • the net goods deficit rose $882m (23%) to $4,766m.

Goods and Services

The trend estimate of the balance on goods and services at current prices was a deficit of $4,404m, an increase of $152m (4%) on the December quarter 2005 deficit.


In seasonally adjusted terms, the balance on goods and services was a deficit of $4,676m, an increase of $502m (12%) on the December quarter 2005 deficit where:

  • the goods deficit rose $882m (23%) to $4,766m
  • the services deficit turned around by $380m to a surplus of $90m.

The increase in the goods deficit resulted from higher goods imports, up $1,439m (3%) partly offset by higher goods exports, up $557m (1%).


The increase in goods debits was composed of:

  • intermediate and other merchandise goods, up $895m (5%)
  • other goods, up $565m (42%)
  • consumption goods, up $52m
  • capital goods, down $73m (1%).

The increase in goods credits was composed of:
  • other goods, up $275m (12%)
  • rural goods, up $248m (4%)
  • non-rural goods, up $34m.

The turnaround in the services deficit resulted from higher services credits, up $454m (5%), partly offset by higher services debits, up $74m (1%).


In seasonally adjusted volume terms, the deficit on goods and services was $12,692m, an increase of $28m on the $12,664m deficit recorded in the December quarter 2005. The net deficit on goods rose $479m (4%) to $12,533m. Goods debits rose $358m (1%) while goods credits fell $121m. The net services balance was a deficit of $158m, a decrease of $453m (74%) on the December quarter 2005 deficit of $611m.


The increase of $28m in the deficit on goods and services in volume terms could be expected to marginally detract from growth in the March quarter 2006 volume measures of GDP, assuming no significant revision to the GDP chain volume estimate for the December quarter 2005.

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



Goods Credits

The trend estimate of goods credits rose $1,016m (3%) to $38,456m in the March quarter 2006.


In seasonally adjusted current price terms, goods credits rose $557m (1%) to $38,420m.


Rural goods (seasonally adjusted, current prices) rose $248m (4%) to $6,430m, with volumes up 6% and prices down 2%. The largest increases were in:

  • cereal grains and cereal preparations, up $160m (14%), with volumes up 19% and prices down 5%
  • wool and sheepskins, up $52m (9%), with volumes up 6% and prices up 2%
  • meat and meat preparations, up $36m (2%), with volumes up 4% and prices down 2%.

Non-rural goods (seasonally adjusted, current prices) rose $34m to $29,405m, with volumes down 2% and prices up 3%. The largest increases were in:
  • metals (excluding non-monetary gold), up $240m (9%), with volumes down 5% and prices up 15%
  • coal, coke and briquettes, up $149m (2%), with volumes up 5% and prices down 2%
  • machinery, up $67m (3%), with volumes up 2% and prices up 1%
  • other manufactures, up $31m (1%), with volumes up 4% and prices down 3%.

Largely offsetting these increases were falls in:
  • metal ores and minerals, down $218m (3%), with volumes down 8% and prices up 5%
  • transport equipment, down $172m (13%), with volumes down 13% and prices up 1%
  • other non-rural (including sugar and beverages), down $45m (1%), with volumes down 6% and prices up 4%.

Other goods (seasonally adjusted, current prices) rose $275m (12%) to $2,585m, driven by a rise in non-monetary gold, up $127m (8%) with volumes down 3% and prices up 12% and by a rise in goods for processing, up $120m (34%), with volumes up 23% and prices up 9%. Some non-monetary gold is included in goods for processing.

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



Goods Debits

The trend estimate of goods debits rose $1,301m (3%) to $42,847m in the March quarter 2006.


In seasonally adjusted current price terms, goods debits rose $1,439m (3%) to $43,186m.


Consumption goods imports (seasonally adjusted, current prices) rose $52m to $12,470m, on increased prices. The largest increases were in:

  • household electrical items, up $100m (10%), with volumes up 12% and prices down 2%
  • food and beverages, mainly for consumption, up $47m (3%), with volumes up 1% and prices up 2%
  • toys, books and leisure goods, up $45m (5%), with volumes up 3% and prices up 1%.

Largely offsetting these increases was a fall in non-industrial transport equipment, down $185m (5%), on reduced volumes.


Capital goods imports (seasonally adjusted, current prices) fell $73m (1%) to $10,452m, with volumes up 1% and prices down 1%. The largest decreases were in:

  • civil aircraft, down $436m, largely on reduced volumes
  • capital goods n.e.s., down $280m (17%), with volumes down 19% and prices up 2%.

Largely offsetting these decreases were rises in:
  • machinery and industrial equipment, up $312m (9%), with volumes up 6% and prices up 3%
  • telecommunications equipment, up $236m (18%), with volumes up 26% and prices down 6%
  • ADP equipment, up $119m (8%), with volumes up 11% and prices down 2%.

Intermediate and other merchandise goods (seasonally adjusted, current prices) rose $895m (5%) to $18,338m, largely on increased prices. The largest increases were in:
  • fuels and lubricants, up $739m (15%), with volumes up 8% and prices up 6%
  • processed industrial supplies n.e.s., up $101m (3%), with volumes down 3% and prices up 6%
  • other parts for capital goods, up $67m (3%), largely on increased prices
  • primary industrial supplies n.e.s., up $63m (25%), with volumes up 22% and prices up 3%
  • parts for transport equipment, up $57m (3%), largely on increased prices
  • parts for ADP equipment, up $48m (11%), with volumes up 10% and prices up 1%.

Partly offsetting these increases were falls in:
  • other merchandise goods, down $126m (36%), largely on decreased volumes
  • iron and steel, down $56m (7%), largely on decreased volumes.

Other goods (seasonally adjusted, current prices) rose $565m (42%) to $1,926m, driven by a rise in goods for processing, up $663m (84%), with volumes up 59% and prices up 15%. Some non-monetary gold is included in goods for processing.

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



Services

The trend estimate of net services was a deficit of $13m, a fall of $133m (91%) on the December quarter 2005 deficit of $146m.


In seasonally adjusted terms, net services recorded a surplus of $90m, a turnaround of $380m from the deficit of $290m in the December quarter 2005.


Services credits, in seasonally adjusted terms at current prices, rose $454m (5%) to $9,813m, with volumes up 4% and prices up 1%. Increases were in:

  • travel services, up $305m (6%), largely on increased volumes
  • passenger and other transportation services, up $95m (5%), with volumes up 2% and prices up 3%
  • other services, up $60m (2%), with both volumes and prices up 1%.

Services debits, in seasonally adjusted terms at current prices, rose $74m (1%) to $9,723m, with volumes down 1% and prices up 2%. Increases were in:
  • freight transportation services, up $86m (4%), with volumes down 1% and prices up 5%
  • other services, up $33m (1%), largely on increased prices.

Partly offsetting these increases were falls in:
  • passenger and other transportation services, down $26m (2%), with volumes down 4% and prices up 2%
  • travel services, down $19m (1%), with volumes down 2% and prices up 1%.

Seasonally adjusted, tourism related services credits rose $280m (5%) to $6,203m while tourism related services debits fell $52m (1%) to $4,977m.


Implicit Price Deflator

In seasonally adjusted terms, the implicit price deflator (IPD) for total goods and services credits rose 1.6%.


In original terms, it rose by 1.7%. The chain Laspeyres price index for goods and services credits rose 2.5%, indicating that the compositional effects had a downward influence on the movement in the IPD. The IPD for goods credits rose 2.3% and the IPD for services credits rose 1.2%.


The total goods and services debits IPD rose 2.4% in seasonally adjusted terms. In original terms, it rose by 3.1%. The chain Laspeyres price index for debits rose 2.3%.

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



Relationship to IPI and EPI

In original terms, the IPD for goods credits rose 2.3%. The chain Laspeyres price index for goods exports rose 2.8%. The export price index (EPI) rose 5.1% during the March quarter 2006.


During the March quarter 2006, the goods imports IPD (in original terms) rose 3.3% and the chain Laspeyres price index for goods imports rose 2.3%. The import price index (IPI) rose 1.8%.


Terms of trade

Australia's seasonally adjusted terms of trade fell 0.8% to 121.7, with an increase of 1.6% in the IPD for goods and services credits and a 2.4% increase in the goods and services debits IPD. The trend estimate of the terms of trade increased 1.2% to 122.9.


Income

The trend estimate of the net income deficit rose $172m (2%) to $9,708m.


In seasonally adjusted terms, the net income deficit fell $810m (8%) to $9,227m. Income credits rose $701m (13%) to $6,175m and income debits fell $109m (1%) to $15,402m.


In original terms, the net income deficit fell $317m (3%) to $9,214m. Income credits rose $550m (10%) to $6,149m and income debits rose $233m (2%) to $15,363m.

Net Income
Graph: Net Income



Current Transfers

In seasonally adjusted terms, the net current transfers deficit was $96m, a decrease of $23m on the $119m deficit recorded in the December quarter 2005. Current transfer credits rose $1m and current transfer debits fell $22m (2%).



CAPITAL AND FINANCIAL ACCOUNT

Capital Account

In original terms, the capital account surplus was $288m, up $53m on the December quarter 2005 surplus. Capital transfer credits rose $70m (11%) to $696m and capital transfer debits rose $18m (5%) to $406m.


Financial Account

In original terms, the balance on financial account recorded a net inflow of $13.4b, with a $18.1b inflow of debt and a $4.7b outflow of equity.


Direct investment in Australia recorded an inflow of $3.0b in March quarter 2006, a decrease of $0.9b on the December quarter 2005 inflow of $3.9b. Australia's direct investment abroad recorded an outflow of $5.8b, an increase of $3.0b on the previous quarter's outflow of $2.7b. In net terms, direct investment recorded an outflow of $2.8b, a turnaround of $3.9b on last quarter's inflow of $1.1b.


Portfolio investment recorded a net inflow of $20.0b, an increase of $2.4b on the net inflow of $17.6b in December quarter 2005. This was driven mainly by continuing increases in foreign debt.


Other investment recorded a net outflow of $1.8b, a turnaround of $7.2b on the net inflow of $5.4b in the previous quarter.


Reserve assets recorded a net outflow of $1.5b, a decrease of $8.4b on the previous quarter's net outflow of $9.9b.



INTERNATIONAL INVESTMENT POSITION


INTERNATIONAL INVESTMENT

Australia's net international investment position as at 31 March 2006 was a net foreign liability of $571.0b, up $12.5b (2.2%) on 31 December 2005. The increase consisted of:

  • net transactions of $13.4b
  • price changes of -$3.4b
  • exchange rate changes of $2.1b
  • other adjustments of $0.3b.

During the March quarter 2006 the level of net debt liabilities increased by $21.7b (4.6%) to $493.5b. Net debt raisings of $18.2b and exchange rate changes of $6.0b were slightly offset by market price decreases of -$2.5b.


During the March quarter 2006 net equity liabilities fell $9.2b (10.6%) to close at $77.6b. The major contributors to this decrease were net transactions of -$4.7b, exchange rate changes of -$3.9b and market price changes of -$0.9b, partially offset by other adjustments of $0.3b.


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