5302.0 - Balance of Payments and International Investment Position, Australia, March 2013 Quality Declaration 
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 04/06/2013   
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ANALYSIS AND COMMENTS


BALANCE OF PAYMENTS


CURRENT ACCOUNT

In original current price terms, the March quarter 2013 current account deficit was $9,376m, a fall of $6,904m (42%) on the December quarter 2012 deficit.

Current account balances, in seasonally adjusted and trend terms at current prices, are shown in the following table.

BALANCE ON CURRENT ACCOUNT IN CURRENT PRICES - March Quarter 2013

Change in:
Current prices
Current prices
Current prices
$m
$m
%

Seasonally Adjusted

Balance on current account
-8 510
6 249
42.3
Balance on goods and services
367
5 578
. .
Net goods
3 096
5 195
. .
Net services
-2 729
383
12.3
Net primary income
-8 548
681
7.4
Net secondary income
-329
-10
-3.1

Trend

Balance on current account
-11 241
1 570
12.3
Balance on goods and services
-2 061
1 513
42.3
Net goods
806
1 407
. .
Net services
-2 867
106
3.6
Net primary income
-8 857
58
0.7
Net secondary income
-323
-1
-0.3

. . not applicable



VOLUMES AND PRICES

Goods and Services

In seasonally adjusted chain volume terms, the balance on goods and services was a surplus of $8,028m, a rise of $3,657m (84%) on the December quarter 2012 surplus of $4,371m.

The net surplus on goods rose $3,529m (44%) on the December quarter 2012 surplus of $8,039m. Goods credits rose $766m (1%) and goods debits fell $2,763m (4%). The net deficit on services fell $127m (3%) on the December quarter 2012 deficit of $3,668m.

The increase in the balance on goods and services surplus, in seasonally adjusted chain volume terms, is expected to contribute 1.0 percentage points to growth in the March quarter 2013 volume measure of GDP, assuming no significant revision to the GDP chain volume estimate for the December quarter 2012.

GOODS AND SERVICES, CHAIN VOLUME MEASURES (a)
Graph: GOODS AND SERVICES, CHAIN VOLUME MEASURES (a)



Terms of Trade and Implicit Price Deflator

Australia's seasonally adjusted terms of trade on net goods and services for the March quarter 2013 rose 2.7% to 90.8 with an increase of 2.1% in the implicit price deflator (IPD) for goods and services credits and a decrease of 0.5% in the IPD for goods and services debits.

In trend terms, the terms of trade for net goods and services fell 1.1% to 89.1.

IMPLICIT PRICE DEFLATOR AND TERMS OF TRADE (a)
Graph: IMPLICIT PRICE DEFLATOR AND TERMS OF TRADE (a)



Goods

The trend estimate of net goods at current prices for the March quarter 2013 was a surplus of $806m, a turnaround of $1,407m on the December quarter 2012 deficit of $601m.

In seasonally adjusted terms at current prices, net goods was a surplus of $3,096m, a turnaround of $5,195m on the December quarter 2012 deficit of $2,099m.

GOODS, Price and volume analysis: Seasonally Adjusted - March Quarter 2013

Change in:
Current prices
Current prices
Chain volume measures(a)
Implicit price deflators(a)
$m
%
%
%

Exports
2 215
3.6
1.1
2.5
Rural goods
122
1.4
-1.9
3.3
Non-rural goods
2 551
5.3
2.0
3.3
Net exports of goods under merchanting
4
7.5
-13.5
24.7
Non-monetary gold
-462
-10.6
-5.8
-5.2
Imports
-2 980
-4.7
-4.4
-0.3
Consumption goods
379
2.2
2.3
-0.1
Capital goods
-2 259
-13.1
-12.3
-0.9
Intermediate and other merchandise goods
-890
-3.2
-3.3
-
Non-monetary gold
-211
-16.4
-12.0
-4.9

- nil or rounded to zero (including null cells)
(a) Reference year 2010-11



Services

SERVICES, Price and volume analysis: Seasonally Adjusted - March Quarter 2013

Change in:
Current prices
Current prices
Chain volume measures(a)
Implicit price deflators(a)
$m
%
%
%

Exports
234
1.8
1.5
0.3
Manufacturing services on physical inputs owned by others
-
-
-
-
Maintenance and repair services n.i.e.
-1
-7.7
-8.3
0.5
Transport
-13
-0.9
-1.1
0.3
Travel
78
1.0
0.8
0.2
Other services
170
4.7
4.2
0.5
Imports
-149
-0.9
0.4
-1.3
Manufacturing services on physical inputs owned by others
-
-
-
-
Maintenance and repair services n.i.e.
12
8.2
9.6
-1.1
Transport
-105
-2.5
0.4
-2.9
Travel
-97
-1.5
-1.1
-0.4
Other services
42
0.8
2.0
-1.2

- nil or rounded to zero (including null cells)
(a) Reference year 2010-11



GOODS CREDITS

The trend estimate of goods credits at current prices rose $189m to $61,958m in the March quarter 2013.

In seasonally adjusted terms at current prices, goods credits rose $2,215m (4%) to $63,349m, with volumes up 1% and prices up 3%.


Rural Goods

Exports of rural goods, in seasonally adjusted terms at current prices, rose $122m (1%) to $9,039m, with volumes down 2% and prices up 3%. The main component contributing to the rise was cereal grains and cereal preparations, up $161m (7%), with volumes up 4% and prices up 4%.

Partly offsetting this rise was the other rural component, down $98m (2%), with volumes down 6% and prices up 4%.


Non-rural Goods

Exports of non-rural goods, in seasonally adjusted terms at current prices, rose $2,551m (5%) to $50,375m, with volumes up 2% and prices up 3%. The main components contributing to the rise were:
  • metal ores and minerals, up $2,168m (11%), with volumes up 2% and prices up 10%
  • coal, coke and briquettes, up $526m (6%), with volumes up 7% and prices down 1%.

Partly offsetting these rises was the other mineral fuels component, down $403m (6%), with volumes down 6% and prices up 1%.

SELECTED MAJOR COMMODITIES, CURRENT PRICES(a)
Graph: SELECTED MAJOR COMMODITIES, CURRENT PRICES(a)



Net Exports of Goods Under Merchanting

Net exports of goods under merchanting, in seasonally adjusted terms at current prices, rose $4m (8%), with volumes down 14% and prices up 25%.


Non-monetary Gold

Non-monetary gold, in original and seasonally adjusted terms at current prices, fell $462m (11%), with volumes down 6% and prices down 5%.


GOODS DEBITS

The trend estimate of goods debits at current prices fell $1,217m (2%) to $61,152m in the March quarter 2013.

In seasonally adjusted terms at current prices, goods debits fell $2,980m (5%) to $60,253m, with volumes down 4%.


Consumption Goods

Imports of consumption goods, in seasonally adjusted terms at current prices, rose $379m (2%) to $17,654m with volumes up 2%. The main components contributing to the rise were:
  • food and beverages, mainly for consumption, up $216m (9%), with volumes up 8% and prices up 1%
  • non-industrial transport equipment, up $172m (4%), with volumes up 4%.


Capital Goods

Imports of capital goods, in seasonally adjusted terms at current prices, fell $2,259m (13%) to $14,984m with volumes down 12% and prices down 1%. The main components contributing to the fall were:
  • capital goods n.e.s., down $1,083m (26%), with volumes down 26%
  • civil aircraft and confidentialised items, down $513m (45%), with volumes down 45%
  • industrial transport equipment n.e.s., down $456m (17%), with volumes down 19% and prices up 2%.


Intermediate and Other Merchandise Goods

Imports of intermediate and other merchandise goods, in seasonally adjusted terms at current prices, fell $890m (3%) to $26,537m, with volumes down 3%. The main components contributing to the fall were:
  • fuels and lubricants, down $615m (6%), with volumes down 9% and prices up 3%
  • organic and inorganic chemicals, down $276m (23%), with volumes down 15% and prices down 10%.


Non-monetary Gold

Imports of non-monetary gold, in original and seasonally adjusted terms at current prices, fell $211m (16%) to $1,077m, with volumes down 12% and prices down 5%.


SERVICES

The trend estimate of net services at current prices was a deficit of $2,867m, a fall of $106m (4%) on the December quarter 2012 deficit of $2,973m.

In seasonally adjusted terms at current prices, net services was a deficit of $2,729m, a fall of $383m (12%) on the December quarter 2012 deficit of $3,112m.


Services Credits

Services credits, in seasonally adjusted terms at current prices, rose $234m (2%) to $13,038m with volumes up 2%. The main component contributing to the rise was other services, up $170m (5%), with volumes up 4%.

In seasonally adjusted terms, tourism related service credits rose $76m (1%) to $8,343m.


Services Debits

Services debits, in seasonally adjusted terms at current prices, fell $149m (1%) to $15,767m, with prices down 1%. The main component contributing to the fall was transport, down $105m (2%), with prices down 3%.

In seasonally adjusted terms, tourism related service debits fell $157m (2%) to $8,169m.


PRIMARY INCOME

The trend estimate of the net primary income deficit at current prices fell $58m (1%) to $8,857m in the March quarter 2013.

In seasonally adjusted terms, the net primary income deficit fell $681m (7%) to $8,548m in the March quarter 2013.

NET PRIMARY INCOME
Graph: NET PRIMARY INCOME



Primary Income Credits

Primary income credits, in seasonally adjusted terms at current prices, rose $763m (8%) to $10,706m. The main components contributing to the rise were:
  • direct investment assets, income on equity and investment fund shares, up $762m (18%)
  • other investment assets, up $36m (8%).

Partly offsetting these rises was a $37m (1%) fall in portfolio investment assets, investment income on equity and investment fund shares.


Primary Income Debits

Primary income debits, in seasonally adjusted terms at current prices, rose $81m to $19,253m. The main components contributing to the rise were:
  • portfolio investment liabilities, investment income on equity and investment fund shares, up $186m (5%)
  • portfolio investment liabilities, interest, up $46m (1%).

Partly offsetting these rises were:
  • direct investment liabilities, interest, down $139m (10%)
  • direct investment liabilities, income on equity and investment fund shares, down $58m (1%).


SECONDARY INCOME

The trend estimate of the net secondary income deficit at current prices, rose $1m to $323m in the March quarter 2013.

In seasonally adjusted terms, the net secondary income deficit at current prices, rose $10m (3%) to $329m in the March quarter 2013.


FINANCIAL ACCOUNT

The balance on financial account, in original terms, recorded a net inflow of $9.6b, with a net inflow of $9.4b of debt and a net inflow of $0.3b of equity.

The financial account surplus decreased $6.7b, from $16.4b in December quarter 2012 to $9.6b in March quarter 2013.

Direct investment recorded a net inflow of $7.5b in March quarter 2013, a decrease of $6.1b from the net inflow of $13.6b in December quarter 2012, where:
  • direct investment liabilities recorded an inflow of $8.2b, a decrease of $12.2b on the inflow of $20.4b in December quarter 2012
  • direct investment assets recorded an outflow of $0.8b, a decrease of $6.1b on the outflow of $6.8b in December quarter 2012.

Portfolio investment recorded a net inflow of $13.4b, an increase of $9.2b on the net inflow of $4.2b in December quarter 2012, where:
  • equity and investment fund shares recorded a net inflow of $2.0b
  • debt securities recorded a net inflow of $11.4b.

Financial derivatives recorded a net outflow of $2.1b, a decrease of $3.3b from the net outflow of $5.3b in December quarter 2012.

Other investment recorded a net outflow of $7.2b, a turnaround of $14.0b from the net inflow of $6.8b in December quarter 2012.

Reserve assets recorded a net outflow of $2.0b, a decrease of $0.9b from the net outflow of $2.9b in December quarter 2012.


INTERNATIONAL INVESTMENT POSITION


ANALYSIS

Australia's net international investment position at 31 March 2013 was a net foreign liability of $877.1b, up $12.8b on the 31 December 2012 position of $864.3b.

The changes contributing to this result are shown in the following table.

INTERNATIONAL INVESTMENT POSITION, Summary - March Quarter 2013

Net international investment position
Net foreign equity
Net foreign debt
$m
$m
$m

Position at beginning of period
864 282
106 997
757 284
Changes in position reflecting
Transactions
9 618
260
9 358
Price changes
-9 575
-5 869
-3 706
Exchange rate changes
13 562
12 102
1 459
Other adjustments
-811
8
-818
Total changes
12 793
6 501
6 294
Position at end of period
877 075
113 498
763 578




SUPPLEMENTARY INFORMATION


CONDITIONS

The conditions in the global economy showed moderate increases for most countries in the March quarter 2013. According to the Organisation for Economic Cooperation and Development (OECD), preliminary real GDP estimates in seasonally adjusted terms showed movement in quarterly growth for: China (1.6%), Japan (0.9%), Korea (0.9%), USA (0.6%), UK (0.3%), Germany (0.1%), Netherlands (-0.1%), France (-0.2%), Italy (-0.5%) and Spain (-0.5%).

Australia's international investment activities during the quarter were as follows:
  • foreign asset transactions were -$2.3b in March quarter 2013 compared to -$16.0b in December quarter 2012
  • foreign liability transactions were $12.0b in March quarter 2013 compared to $32.4b in December quarter 2012.

The Australian share market, as measured by the MSCI global index, increased by 7.3% in March quarter 2013, compared to the 6.0% increase in December quarter 2012. There were increases in all major markets: Japan 20.4%, Switzerland 14.2%, USA 10.1%, United Kingdom 8.6%, New Zealand 6.3 %, Singapore 4.4%, Hong Kong 3.3%, France 3.1%, Germany 2.6%, Canada 2.4% and Europe ex UK 2.4%. A market price change of -$21.3b was recorded for foreign equity assets and $15.4b in foreign equity liabilities during March quarter 2013.

According to Bloomberg, the composite corporate benchmark yield increased in Australia from 4.28% to 4.36%, in the US from 2.77% to 2.83% and in Germany from 1.96% to 2.02%. It decreased in the UK from 3.39% to 3.30% and in Japan from 0.67% to 0.51%. The long term 10 year government bond yield increased in the USA from 1.78% to 1.87%. It decreased in the UK from 1.85% to 1.78%, Germany from 1.30% to 1.28% and Japan from 0.79% to 0.56%. In Australia, the rate increased from 3.23% to 3.51%. Market price changes were recorded for portfolio debt securities liabilities of -$8.4b and assets of $1.4b in March quarter 2013.

The Australian dollar appreciated against a number of the major currencies and fell against others in March quarter 2013. It increased 9.6% against the Japanese yen, 7.2% against UK pound sterling, 5.4% against Norwegian krone, 4.7% against Swiss franc, 3.7% against Euro, 3.1% against Danish krona, 2.6% against Canadian dollar, 0.4% against the US dollar and 0.2% against the Chinese renminbi. The Australian dollar fell 1.1% against the New Zealand dollar and 0.3% against Indian rupee. The Trade Weighted Index (TWI) recorded an increase of 2.6%. This is reflected in the exchange rate changes for foreign liabilities of -$2.8b and foreign assets of $16.3b.


RELATIONSHIP BETWEEN IPD, EPI AND IPI(footnote 1)

In original terms, the IPD for total goods credits rose 4.8% and the chain Laspeyres price index for goods exports rose 3.7%. The export price index (EPI) rose 2.8% during the March quarter 2013.

In original terms, the IPD for total goods debits rose 0.4% and the chain Laspeyres price index for goods imports rose 0.2%. The import price index (IPI) remained steady during the March quarter 2013.

Differences between the IPD and International Trade Price Indexes can arise due to a number of methodological factors including differences in pricing points, timing, coverage and weights. In the March quarter 2013, differences between the IPD and EPI were mainly due to the 'cereal grains and cereal preparations', 'coal, coke and briquettes' and 'wool and sheepskins' components.

GOODS AND SERVICES, Price comparison - March Quarter 2013

Changes in
Seasonally adjusted
Original
Implicit price deflators(a)
Implicit price deflators(a)
International Trade price indexes(b)
Chain Laspeyres price indexes(a)
%
%
%
%

Exports
Goods
2.5
4.8
2.8
3.7
Services
0.3
0.3
na
0.3
Imports
Goods
-0.3
0.4
-
0.2
Services
-1.3
-1.3
na
-1.2

- nil or rounded to zero (including null cells)
na not available
(a) Reference year 2010-11
(b) Source: International Trade Price Indexes, Australia (cat. no. 6457.0)

IMPLICIT PRICE DEFLATORS AND INTERNATIONAL TRADE PRICE INDEXES
Graph: IMPLICIT PRICE DEFLATORS AND INTERNATIONAL TRADE PRICE INDEXES



Commodity Price Indexes

The RBA Commodity Price Index(footnote 2) (average monthly index) for rural commodities decreased 1.4% between the December quarter 2012 and March quarter 2013 while the EPI for rural goods increased 0.3%.

The RBA Commodity Price Index for non-rural commodities increased 7.4% while the EPI for non-rural goods total (excluding non-monetary gold) increased 4.0%.

Differences between the RBA Commodity Price Index and ABS price measures are largely a consequence of methodological differences used in the construction of the respective indexes, including coverage of included commodities and timing of source data.

1 In this commentary movements in indexes are based on data to four decimal places. <back
2 For RBA Commodity Price Index methodology, see paragraph 23 of the Explanatory Notes. <back