5302.0 - Balance of Payments and International Investment Position, Australia, Sep 2011 Quality Declaration 
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 06/12/2011   
   Page tools: Print Print Page Print all pages in this productPrint All RSS Feed RSS Bookmark and Share Search this Product

ANALYSIS AND COMMENTS


BALANCE OF PAYMENTS


CURRENT ACCOUNT

In original current price terms, the September quarter 2011 current account deficit was $8,049m, a rise of $3,734m (87%) on the June quarter 2011 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 - September Quarter 2011

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

Seasonally Adjusted

Balance on current account
-5 637
1 023
15.4
Balance on goods and services
6 801
583
9.4
Net goods
9 494
1 219
14.7
Net services
-2 693
-636
-30.9
Net primary income
-12 364
420
3.3
Net secondary income
-74
20
21.3

Trend

Balance on current account
-6 061
868
12.5
Balance on goods and services
6 419
311
5.1
Net goods
8 991
657
7.9
Net services
-2 572
-346
-15.5
Net primary income
-12 410
538
4.2
Net secondary income
-70
19
21.3




VOLUMES AND PRICES

Goods and Services

In seasonally adjusted chain volume terms, the balance on goods and services was a deficit of $13,270m, a rise of $1,930m (17%) on the June quarter 2011 deficit of $11,340m. The September quarter 2011 result is the highest deficit on record.

The net deficit on goods rose $1,482m (20%) on the June quarter 2011 deficit of $7,426m. Goods credits rose $1,845m (4%) and goods debits rose $3,327m (6%). The net deficit on services rose $450m (12%) on the June quarter 2011 deficit of $3,913m.

The increase in the balance on goods and services deficit, in seasonally adjusted chain volume terms, is expected to detract 0.6 percentage points from growth in the September quarter 2011 volume measure of GDP, assuming no significant revision to the GDP chain volume estimate for the June quarter 2011.

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 rose 2.7% to 131.5 with an increase of 2.4% in the implicit price deflator (IPD) for goods and services credits and a decrease of 0.3% in the IPD for goods and services debits.

In trend terms, the terms of trade for net goods and services rose 3.0% to 132.2.

The September quarter 2011 terms of trade, in both trend and seasonally adjusted terms, were the highest on record.

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 was a surplus of $8,991m, a rise of $657m (8%) on the June quarter 2011 surplus of $8,334m.

In seasonally adjusted terms at current prices, net goods recorded a surplus of $9,494m, a rise of $1,219m (15%) on the June quarter 2011 surplus of $8,275m.

GOODS, Price and volume analysis: Seasonally Adjusted - September Quarter 2011

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

Exports
3 963
6.1
3.6
2.3
Rural goods
296
3.5
5.8
-2.2
Non-rural goods
2 741
5.1
2.7
2.4
Net exports of goods under merchanting
6
85.7
80.0
1.5
Non-monetary gold
919
26.9
11.4
13.9
Imports
2 744
4.8
5.7
-0.8
Consumption goods
898
5.9
6.0
-0.1
Capital goods
1 566
11.4
10.8
0.5
Intermediate and other merchandise goods
-252
-0.9
1.5
-2.4
Non-monetary gold
531
46.2
27.9
14.3




Services

SERVICES, Price and volume analysis: Seasonally Adjusted - September Quarter 2011

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

Exports
-528
-4.2
-4.9
0.8
Manufacturing services on physical inputs owned by others
-1
-12.5
-12.5
0.7
Maintenance and repair services n.i.e.
5
55.6
44.4
0.7
Transport
-28
-1.8
-2.9
1.1
Travel
-509
-6.6
-7.3
0.8
Other services
4
0.1
-0.4
0.6
Imports
107
0.7
-0.9
1.7
Manufacturing services on physical inputs owned by others
-1
-100.0
-
-
Maintenance and repair services n.i.e.
-74
-48.4
-49.4
1.7
Transport
103
2.8
0.9
1.9
Travel
32
0.5
-1.0
1.5
Other services
47
1.2
-0.5
1.7

- nil or rounded to zero (including null cells)



GOODS CREDITS

The trend estimate of goods credits at current prices rose $3,122m (5%) to $68,662m in the September quarter 2011.

In seasonally adjusted terms at current prices, goods credits rose $3,963m (6%) to $69,466m, with volumes up 4% and prices up 2%.


Rural Goods

Exports of rural goods, in seasonally adjusted terms at current prices, rose $296m (4%) to $8,752m, with volumes up 6% and prices down 2%. The main component contributing to the rise was other rural, up $226m (6%), with volumes up 7%.


Non-rural Goods

Exports of non-rural goods, in seasonally adjusted terms at current prices, rose $2,741m (5%) to $56,360m, with volumes up 3% and prices up 2%. The main components contributing to the rise were:
  • metal ores and minerals, up $1,833m (8%), with volumes up 7% and prices up 2%
  • coal, coke and briquettes, up $966m (8%), with volumes up 5% and prices up 3%
  • other manufactures, up $228m (6%), with volumes up 4% and prices up 2%.

Partly offsetting these increases was the other mineral fuels component, down $465m (7%), with volumes down 8% 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 $6m (86%) to $13m, with volumes up 80% and prices up 2%.


Non-monetary Gold

Exports of non-monetary gold, in seasonally adjusted terms at current prices, rose $919m (27%) to $4,340m, with volumes up 11% and prices up 14%.


GOODS DEBITS

The trend estimate of goods debits at current prices rose $2,465m (4%) to $59,671m in the September quarter 2011.

In seasonally adjusted terms at current prices, goods debits rose $2,744m (5%) to $59,972m, with volumes up 6% and prices down 1%.


Consumption Goods

Imports of consumption goods, in seasonally adjusted terms at current prices, rose $898m (6%) to $16,238m, with volumes up 6%. The main components contributing to the rise were:
  • non-industrial transport equipment, up $703m (21%), with volumes up 22% and prices down 1%
  • consumption goods n.e.s., up $111m (2%), with volumes up 4% and prices down 2%.


Capital Goods

Imports of capital goods, in seasonally adjusted terms at current prices, rose $1,566m (11%) to $15,289m with volumes up 11%. The main components contributing to the rise were:
  • capital goods n.e.s., up $725m (26%), with volumes up 24% and prices up 1%
  • industrial transport equipment n.e.s., up $422m (26%), with volumes up 27%
  • machinery and industrial equipment, up $418m (10%), with volumes up 9% and prices up 1%.


Intermediate and Other Merchandise Goods

Imports of intermediate and other merchandise goods, in seasonally adjusted terms at current prices, fell $252m (1%) to $26,764m, with volumes up 1% and prices down 2%. The main components contributing to the fall were:
  • fuels and lubricants, down $660m (7%), with volumes up 1% and prices down 8%
  • iron and steel, down $184m (18%), with volumes down 17% and prices down 1%.

Partly offsetting these decreases was the processed industrial supplies n.e.s. component, up $551m (10%), with volumes up 9%.


Non-monetary Gold

Imports of non-monetary gold, in seasonally adjusted terms at current prices, rose $531m (46%) to $1,680m, with volumes up 28% and prices up 14%.


SERVICES

The trend estimate of net services at current prices was a deficit of $2,572m, a rise of $346m (16%) on the June quarter 2011 deficit of $2,226m.

In seasonally adjusted terms at current prices, net services recorded a deficit of $2,693m, a rise of $636m (31%) on the June quarter 2011 deficit of $2,057m.


Services Credits

Services credits, in seasonally adjusted terms at current prices, fell $528m (4%) to $12,118m with volumes down 5% and prices up 1%. The main component contributing to the fall was travel, down $509m (7%), with volumes down 7% and prices up 1%.

In seasonally adjusted terms, tourism related service credits fell $538m (6%) to $7,794m.


Services Debits

Services debits, in seasonally adjusted terms at current prices, rose $107m (1%) to $14,810m, with volumes down 1% and prices up 2%. The main component contributing to the rise was transport, up $103m (3%), with volumes up 1% and prices up 2%.

In seasonally adjusted terms, tourism related service debits rose $30m to $8,321m.


PRIMARY INCOME

The trend estimate of the net primary income deficit at current prices decreased $538m (4%) in the September quarter 2011 to $12,410m.

In seasonally adjusted terms, the net primary income deficit decreased $420m (3%) in the September quarter 2011 to $12,364m.

NET PRIMARY INCOME
Graph: NET PRIMARY INCOME



Primary Income Credits

Primary income credits, in seasonally adjusted terms at current prices, increased $286m (3%) to $10,325m. The main contributors to the increase were:
  • a $253m (6%) increase in direct investment assets, income on equity and investment fund shares
  • a $110m (4%) increase in portfolio investment assets, investment income on equity and investment fund shares.

Partly offsetting these increases was a $101m (4%) decrease in portfolio investment assets, interest.


Primary Income Debits

Primary income debits, in seasonally adjusted terms at current prices, decreased $135m (1%) to $22,688m. The main contributor to the decrease was a $716m (9%) decrease in portfolio investment liabilities, interest.

Partly offsetting this decrease was a $450m (5%) increase in direct investment liabilities, income on equity and investment fund shares.


SECONDARY INCOME

In trend terms, the net secondary income deficit at current prices, fell $19m (21%) in the September quarter 2011 to $70m.

In seasonally adjusted terms, the net secondary income deficit at current prices, fell $20m (21%) in the September quarter 2011 to $74m.


FINANCIAL ACCOUNT

The balance on financial account, in original terms, recorded a net inflow of $8.0b, with a net inflow of $4.3b of equity and a net inflow of $3.7b of debt.

The financial account surplus increased $3.3b from $4.7b in June quarter 2011 to $8.0b in September quarter 2011.

Direct investment recorded a net inflow of $5.3b in September quarter 2011, a decrease of $12.9b from the net inflow of $18.2b in June quarter 2011, where:
  • direct investment liabilities recorded an inflow of $18.8b, an increase of $3.6b on the inflow of $15.2b in June quarter 2011
  • direct investment assets recorded an outflow of $13.5b, a turnaround of $16.5b on the inflow of $2.9b in June quarter 2011.

Portfolio investment recorded a net inflow of $21.6b, a turnaround of $25.7b on the net outflow of $4.0b in June quarter 2011, where:
  • equity and investment fund shares recorded a net inflow of $0.9b
  • debt securities recorded a net inflow of $20.7b, where portfolio investment liabilities debt securities increased $2.3b from $15.5b of issues in June quarter 2011 to $17.8b in September quarter 2011.

Financial derivatives recorded a net outflow of $17.8b, an increase of $14.1b from the net outflow of $3.7b in June quarter 2011. The main contributor was deposit-taking corporations, except the central bank with a net outflow of $11.8b.

Other investment recorded a net outflow of $0.7b, a turnaround of $1.4b from the net inflow of $0.7b in June quarter 2011.

Reserve assets recorded a net outflow of $0.3b, a decrease of $6.1b from the net outflow of $6.4b in June quarter 2011.


INTERNATIONAL INVESTMENT POSITION


ANALYSIS

Australia's net international investment position at 30 September 2011 was a net foreign liability of $848.3b, up $50.6b on the 30 June 2011 position of $797.7b.

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

INTERNATIONAL INVESTMENT POSITION, Summary - September Quarter 2011

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

Position at beginning of period
797 651
111 418
686 233
Changes in position reflecting
Transactions
8 029
4 316
3 713
Price changes
33 235
19 713
13 522
Exchange rate changes
10 496
-25 751
36 246
Other adjustments
-1 129
-1 919
790
Total changes
50 631
-3 640
54 271
Position at end of period
848 283
107 778
740 504




SUPPLEMENTARY INFORMATION


CONDITIONS

Economic indicators showed moderate increases for most countries in the September quarter 2011. According to the Organisation for Economic Cooperation and Development (OECD), preliminary real GDP estimates in seasonally adjusted terms showed positive quarterly growth for: Japan (1.5%), Germany (0.5%), UK (0.5%), USA (0.5%), France (0.4%) and OECD total (0.6%).

Australia's international investment activities decreased substantially during the quarter:
  • foreign asset transactions were $21.2b in September quarter 2011 compared to $32.6b in June quarter 2011
  • foreign liability transactions were $29.3b in September quarter 2011 compared to $37.4b in June quarter 2011.

The Australian share market, as measured by the MSCI global index, decreased 13.4% in September quarter 2011, following a 4.7% decrease in June quarter 2011. There were decreases in all major markets: Germany -25.4%, France -24.5%, Hong Kong -20.5%, Europe ex UK -15.3%, Singapore -14.6%, USA -14.5%, United Kingdom -13.6%, Canada -12.9%, Japan -11.5%, Switzerland -11.0% and New Zealand -1.5%. A market price change of $80.4b was recorded for foreign equity assets and -$60.7b in foreign equity liabilities during September quarter 2011.

According to Reuters, the composite corporate benchmark yield decreased in Australia from 6.40% to 6.10%, UK (4.60% to 4.00%), USA (4.00% to 3.10%), Germany (3.90% to 3.40%) and Japan (1.40% to 1.20%). Long term government bond yields decreased in all major markets over September quarter 2011. The 10 year government bond yields decreased in the UK (3.38% to 2.42%), USA (3.18% to 1.92%), Germany (3.01% to 1.86%) and Japan (1.14% to 1.03%). In Australia, the rate decreased from 5.16% to 4.20%. This is reflected in the market price changes for both portfolio debt securities liabilities ($13.0b) and assets ($1.4b) in September quarter 2011.

The Australian dollar depreciated against a number of the major currencies in the September quarter 2011. It decreased against the Japanese yen (-13.3%), Chinese renminbi (-10.0%), US dollar (-8.9%), Hong Kong dollar (-8.8%), UK pound sterling (-6.0%), Singapore dollar (-3.9%), Malaysian ringgit (-3.8%), European euro (-2.6%), Canadian dollar (-2.2%), New Zealand dollar (-1.5%) and Swiss franc (-1.5%). The Trade Weighted Index (TWI) recorded a decrease of 6.9%. The net impact of exchange rate changes was an increase of $33.7b in foreign assets and $44.2b in foreign liabilities.


RELATIONSHIP BETWEEN IPD, EPI AND IPI(footnote 1)

In original terms, the IPD for total goods credits rose 2.5% and the chain Laspeyres price index for goods exports rose 2.7%. The export price index (EPI) rose 4.0% during the September quarter 2011.

In original terms, the IPD for total goods debits fell 0.4% and the chain Laspeyres price index for goods imports rose 0.3%. The import price index (IPI) remained steady at 117.1 during the September quarter 2011.

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 September quarter 2011, the difference between the IPD and EPI were mainly due to the 'cereal grains and cereal preparations', 'other rural' and 'coal, coke and briquettes' components.

GOODS AND SERVICES, Price comparison - September Quarter 2011

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

Exports
Goods
2.3
2.5
4.0
2.7
Services
0.8
0.8
na
0.9
Imports
Goods
-0.8
-0.4
-
0.3
Services
1.7
1.7
na
1.6

- nil or rounded to zero (including null cells)
na not available
(a) 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 3.5% between the June 2011 and September 2011 quarters while the EPI for rural goods total increased 2.0%.

The RBA Commodity Price Index for non-rural commodities increased 3.8% while the EPI for non-rural goods total (excluding non-monetary gold) increased 3.4%.

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