5302.0 - Balance of Payments and International Investment Position, Australia, Jun 2016 
Quality Declaration
Quality Declaration ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 06/09/2016
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ANALYSIS AND COMMENTS
In seasonally adjusted current price terms, the June quarter 2016 current account deficit was $15,535m, an increase of $636m (4%) on the March quarter 2016 deficit. In trend current price terms, the June quarter 2016 current account deficit was $15,578m, a decrease of $1,868m (11%) on the March quarter 2016 deficit. The contributors to the current account balances, in seasonally adjusted and trend terms at current prices, are shown in the following table.
TERMS OF TRADE(footnote 1) Australia's seasonally adjusted terms of trade on net goods and services for the June quarter 2016 rose 2.3% to 80.5, with an increase of 0.7% in the implicit price deflator (IPD) for goods and services credits and a decrease of 1.6% in the IPD for goods and services debits. In trend terms, the terms of trade for net goods and services fell 0.4% to 79.1. BALANCE ON GOODS AND SERVICES In seasonally adjusted chain volume terms, the balance on goods and services was a surplus of $10,797m, a decrease of $999m (8%) on the March quarter 2016 surplus of $11,796m. The net surplus on goods decreased $1,136m (9%) on the March quarter 2016 surplus of $12,022m. Goods credits rose $1,110m (1%) and goods debits rose $2,245m (3%). The net deficit on services decreased $137m (61%) on the March quarter 2016 deficit of $226m. The decrease in the balance on goods and services surplus, in seasonally adjusted chain volume terms, is expected to detract 0.2 percentage points from growth in the June quarter 2016 volume measure of GDP, assuming no significant revision to the GDP chain volume estimate for the March quarter 2016. Goods The trend estimate of net goods at current prices for the June quarter 2016 was a deficit of $7,067m, a decrease of $71m (1%) on the March quarter 2016 deficit of $7,138m. In seasonally adjusted terms at current prices, net goods was a deficit of $6,415m, a decrease of $243m (4%) on the March quarter 2016 deficit of $6,658m.
GOODS CREDITS The trend estimate of goods credits at current prices fell $835m (1%) to $58,944m in the June quarter 2016. In seasonally adjusted terms at current prices, goods credits rose $1,383m (2%) to $60,192m, with volumes up 1% and prices up 1%. Rural Goods Exports of rural goods, in seasonally adjusted terms at current prices, fell $178m (2%) to $10,173m, with volumes down 1% and prices down 1%. The main components contributing to the fall were:
Non-rural Goods Exports of non-rural goods, in seasonally adjusted terms at current prices, rose $763m (2%) to $44,788m, with volumes up 1% and prices up 1%. The main components contributing to the rise were:
Partly offsetting these rises was other mineral fuels, down $521m (9%), with prices down 9%. Net Exports of Goods Under Merchanting Net exports of goods under merchanting, in seasonally adjusted terms at current prices, fell $10m (11%), with volumes down 15% and prices up 5%. Non-monetary Gold Non-monetary gold, in original and seasonally adjusted terms at current prices, rose $808m (19%), with volumes up 15% and prices up 3%. GOODS DEBITS The trend estimate of goods debits at current prices fell $906m (1%) to $66,011m in the June quarter 2016. In seasonally adjusted terms at current prices, goods debits rose $1,141m (2%) to $66,608m, with volumes up 3% and prices down 2%. Consumption Goods Imports of consumption goods, in seasonally adjusted terms at current prices rose $751m (3%) to $24,601m, with volumes up 7% and prices down 3%. The main components contributing to the rise were:
Capital Goods Imports of capital goods, in seasonally adjusted terms at current prices fell $398m (3%) to $15,019m, with prices down 3%. The main components contributing to the fall were:
Partly offsetting these falls was capital goods n.e.s., up $307m (15%), with volumes up 18% and prices down 3%. Intermediate and Other Merchandise Goods Imports of intermediate and other merchandise goods, in seasonally adjusted terms at current prices rose $530m (2%) to $25,516m, with volumes up 2%. The main components contributing to the rise were:
Partly offsetting these rises were:
Non-monetary Gold Imports of non-monetary gold, in original and seasonally adjusted terms at current prices, rose $257m (21%), with volumes up 18% and prices up 3%. SERVICES The trend estimate of net services at current prices was a deficit of $1,661m, a decrease of $452m (21%) on the March quarter 2016 deficit of $2,113m. In seasonally adjusted terms at current prices, net services was a deficit of $1,580m, a decrease of $410m (21%) on the March quarter 2016 deficit of $1,990m.
Services Credits Services credits, in seasonally adjusted terms at current prices, rose $168m (1%) to $17,161m, with volumes up 1%. The main components contributing to the rise were:
Partly offsetting these rises was transport, down $16m (1%), with volumes down 1%. In seasonally adjusted terms, tourism related services credits rose $100m (1%) to $11,069m. Services Debits Services debits, in seasonally adjusted terms at current prices, fell $242m (1%) to $18,741m, with prices down 1%. The main components contributing to the fall were:
Partly offsetting these falls were:
In seasonally adjusted terms, tourism related services debits fell $149m (2%) to $9,718m. PRIMARY INCOME The trend estimate of the net primary income deficit at current prices decreased $1,322m (17%) to $6,452m in the June Quarter 2016. The seasonally adjusted estimate of the net primary income deficit at current prices increased $1,351m (23%) to $7,160m in the June Quarter 2016. Primary Income Credits Primary income credits, in seasonally adjusted terms at current prices, increased $523m (4%) to $15,404m. The main component contributing to this increase was direct investment assets, income on equity and investment fund shares, increasing $775m (13%) to $6,880m. Primary Income Debits Primary income debits, in seasonally adjusted terms at current prices, increased $1,875m (9%) to $22,564m. The main component contributing to this increase was investment income, direct investment liabilities, income on equity and investment fund shares, increasing $1,724m (33%) to $6,928m. SECONDARY INCOME The trend estimate of the net secondary income deficit at current prices decreased $22m (5%) to $398m in the June quarter 2016. In seasonally adjusted terms, the net secondary income deficit at current prices decreased $63m (14%) to $380m in the June quarter 2016. CAPITAL ACCOUNT In original terms, the capital account deficit was $155m, an increase of $23m (17%) on the March quarter 2016 deficit of $132m. Capital account credits remained steady at $2m and capital account debits increased $23m (17%) in the June quarter 2016. FINANCIAL ACCOUNT The balance of the financial account, in original terms, recorded a net inflow of $14.2b, which was driven by a net inflow of equity of $5.1b and a net inflow of debt of $9.1b. The financial account surplus decreased $1.5b from $15.7b to $14.2b in the June quarter 2016. Direct Investment Direct investment recorded a net inflow of $10.6b in the June quarter 2016, a decrease of $0.03b on the inflow of $10.7b in the March quarter 2016, where:
Portfolio Investment Portfolio investment recorded a net outflow of $6.1b in the June quarter 2016, a decrease of $13.9b on the outflow of $20.0b in the March quarter 2016, where:
Financial Derivatives Financial derivatives recorded a net outflow of $4.8b in the June quarter 2016, an increase of $1.3b on the outflow of $3.4b in the March quarter 2016. Other Investment Other investment recorded a net inflow of $15.9b in the June quarter 2016, a decrease of $10.8b on the inflow of $26.7b in the March quarter 2016. This was driven by a net inflow in currency and deposits of $18.4b and offset by a net outflow of loans of $6.2b. Reserve Assets Reserve assets recorded a net outflow of $1.5b in the June quarter 2016, a turnaround of $3.3b on the inflow of $1.8b in the March quarter 2016. INTERNATIONAL INVESTMENT POSITION (IIP) Australia's net IIP liability position was $1,035.9b at 30 June 2016, an increase of $28.1b (3%) on the revised 31 March 2016 position of $1,007.8b. Australia's net foreign debt liability increased $22.7b (2%) to a net liability position of $1,044.5b. Australia's net foreign equity asset decreased $5.4b (38%) to a net asset position of $8.6b at 30 June 2016. The changes contributing to this result are shown in the following table.
SUPPLEMENTARY INFORMATION CONDITIONS The conditions in the global economy showed modest growth for most countries in the June quarter 2016. Growth in the US and the EU continued, however, growth in Asia is again weaker than expected. According to the Organisation for Economic Cooperation and Development (OECD)(footnote 2), preliminary growth rates compared to last quarter in seasonally adjusted terms showed quarterly growth for South Korea (0.7%), UK (0.6%), Germany (0.4%), Euro area (0.3%) and the USA (0.3%).
The Australian share market, as measured by the MSCI global index(footnote 3), increased 2.8% in the June quarter 2016, following a decrease of 4.7% in the March quarter 2016. Increases were recorded in UK (5.4%), Canada (3.2%), New Zealand (3.1%), USA (2.1%) and Switzerland (2.1%). Decreases were recorded in Japan (7.9%), Germany (5.1%), France (3.7%), Singapore (1.2%) and Hong Kong (0.6%). A market price change of -$2.4b was recorded for foreign equity assets and $16.7b in foreign equity liabilities in the June quarter 2016. According to Bloomberg(footnote 4), the composite corporate benchmark yield decreased in the UK from 2.90% to 2.55%, the USA from 3.22% to 2.92%, Germany from 1.11% to 0.93% and Japan from 0.22% to 0.13%. In Australia, the rate decreased from 3.62% to 3.16%. The long-term 10 year government bond yields decreased in the UK from 1.42% to 0.87%, the USA from 1.78% to 1.49%, Germany from 0.16% to -0.13% and Japan from -0.04% to -0.23%. In Australia, the rate decreased from 2.57% to 2.12%. A market price change of -$1.8b was recorded for portfolio debt securities assets and $7.5b in portfolio debt securities liabilities in the June quarter 2016. The Australian dollar depreciated against the majority of the major currencies in the June quarter 2016. The Australian dollar depreciated 11.29% against the Japanese yen, 5.50% against the New Zealand dollar, 3.21% against the Canadian dollar, 3.02% against the US dollar and 0.98% against the European euro. It increased 3.95% against UK pound sterling. The Trade Weighted Index (TWI)(footnote 4) (footnote 5), recorded a fall of 2.95%. This is reflected in exchange rate changes for foreign assets of -$34.2b and foreign liabilities of $24.9b in the June quarter 2016. RELATIONSHIP BETWEEN IPD, EPI AND IPI(footnote 6) In original terms, the IPD for total goods credits rose 1.8% and the chain Laspeyres price index for goods exports rose 1.2%. The Export Price Index (EPI)(footnote 7) rose 1.4% during the June quarter 2016. In original terms, the IPD for total goods debits fell 1.3% and the chain Laspeyres price index for goods imports fell 1.1%. The Import Price Index (IPI)(footnote 7) fell 1.0% during the June quarter 2016. 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.
Commodity Price Indexes The RBA Commodity Price Index (average monthly index) for rural commodities increased 0.04% between the March quarter 2016 and June quarter 2016 while the EPI for rural goods decreased 1.45%. The RBA Commodity Price Index for non-rural commodities increased 5.15% while the EPI for non-rural goods total (excluding non-monetary gold) increased 1.82%. 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. FINANCIAL YEAR 2015-16 SITUATION CURRENT ACCOUNT In original terms, the balance on current account for 2015-16 was a deficit of $72.8b, an increase of $14.6b (25%) on the deficit of $58.2b recorded for 2014-15. The balance on goods and services was a deficit of $36.9b, an increase of $13.9b (61%) on the deficit of $23.0b recorded in 2014-15. Goods and services credits decreased $6.8b (2%) and goods and services debits increased $7.1b (2%). The low value threshold adjustments applied to goods debits for 2015-16, increased $0.2b to $7.6b. The 2015-16 net primary income deficit increased $1.1b (3%), with an increase in primary income credits of $3.0b (6%) and an increase in primary income debits of $4.1b (5%). The 2015-16 net secondary income deficit decreased $0.4b (19%), with an increase in secondary income credits of $0.3b (4%) and a decrease in secondary income debits of $0.1b (1%). FINANCIAL ACCOUNT The balance on financial account recorded a net inflow of $76.4b, with a net inflow of equity of $24.2b and a net inflow of debt of $52.2b. This result was an increase of $23.6b on the net inflow of $52.9b recorded for the previous financial year as a result of:
INTERNATIONAL INVESTMENT POSITION Australia's net international investment position as at 30 June 2016 was a net foreign liability of $1,035.9b. This was an increase of $142.8b (16%) on the position a year earlier as a result of:
During 2015-16, Australia's net foreign equity experienced a decrease of $67.8b (89%) on the previous financial year, from a net asset position of $76.5b to a net asset position of $8.6b. This was contributed by net transactions of $24.2b, price changes of $43.4b and exchange rate changes of $16.2b, partly offset by other changes of -$15.9b. Australia's net foreign debt liability increased to $1,044.5b, an increase of $75.0b (8%) on the previous financial year, with net transactions of $52.2b, price changes of $20.9b and other changes of $6.9b, partly offset by exchange rate changes of -$5.1b. At 30 June 2016, the ratio of Australia's net international investment position to GDP using the latest available GDP figure (for the year ended 31 March 2016 using current prices) was 63.3%. This compares with 55.4% one year ago. FOOTNOTES 1 In this commentary movements in indexes are based on data to four decimal places. <back 2 OECD Statistics Quarterly National Account, Organisation for Economic Cooperation and Development – Economic Department, viewed 23 August 2016. Data for Greece and Hungary are preliminary estimates. <back 3 MSCI Global Market Indexes 2016, Morgan Stanley Capital International, viewed 7 July 2016. <back 4 Bloomberg, Bloomberg Professional Service, viewed 9 July 2016. <back 5 Exchange Rates – Daily 2014 to Current, Reserve Bank of Australia - Statistical Tables, viewed 9 July 2016. <back 6 In this commentary movements in indexes are based on data to four decimal places. <back 7 Source: International Trade Price Indexes, Australia (cat. no. 6457.0). <back Document Selection These documents will be presented in a new window.
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