5302.0 - Balance of Payments and International Investment Position, Australia, Sep 2018 Quality Declaration 
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 04/12/2018   
   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

In original current price terms, the September quarter 2018 current account deficit was $12,641m, a rise of $1,960m on the June quarter 2018 deficit. In original current price terms, the balance on goods and services was a net surplus of $6,016m, primary income was a net deficit of $18,352m and secondary income was a net deficit of $305m.

In original current price terms, the September quarter 2018 capital and financial account surplus was $11,116m, a fall of $2,692m on the June quarter 2018 surplus. In original current price terms, the capital account was a net deficit of $89m and the financial account was a net surplus of $11,205m.

The contributors to the current account balances, in original terms at current prices, are shown in the following table.

BALANCE OF PAYMENTS, Summary(a): Original

Sep 2017
Dec 2017
Mar 2018
Jun 2018
Sep 2018
$m
$m
$m
$m
$m

CURRENT ACCOUNT
-15 301
-15 945
-9 296
-10 681
-12 641
Goods and services
170
-1 838
5 892
3 617
6 016
Credits
96 474
98 632
102 679
105 456
111 993
Debits
-96 304
-100 470
-96 787
-101 839
-105 977
Goods
2 992
-397
4 158
6 068
8 029
Credits
75 701
76 636
78 322
84 534
88 540
Debits
-72 709
-77 033
-74 164
-78 466
-80 511
Services
-2 822
-1 441
1 734
-2 451
-2 013
Credits
20 773
21 996
24 357
20 922
23 453
Debits
-23 595
-23 437
-22 623
-23 373
-25 466
Primary income
-15 230
-14 133
-14 830
-13 796
-18 352
Credits
13 248
14 552
14 584
16 093
15 707
Debits
-28 478
-28 685
-29 414
-29 890
-34 059
Secondary income
-241
26
-358
-502
-305
Credits
2 288
2 240
2 260
2 339
2 302
Debits
-2 529
-2 214
-2 618
-2 841
-2 607
CAPITAL AND FINANCIAL ACCOUNT
16 513
17 586
10 746
13 808
11 116
Capital account
-123
-403
-20
-132
-89
Acquisitions/disposals of non-produced non-financial assets
3
11
123
34
37
Credits
5
12
125
82
39
Debits
-2
-1
-2
-48
-2
Capital transfers
-126
-414
-143
-166
-126
Credits
-
-
-
-
-
Debits
-126
-414
-143
-166
-126
Financial account
16 636
17 989
10 766
13 940
11 205
Direct investment
10 840
8 390
15 009
27 736
5 399
Assets
-8 395
-929
-186
-7 402
-8 148
Liabilities
19 235
9 319
15 195
35 139
13 547
Portfolio investment
-4 078
9 637
6 509
-290
-21 344
Assets
-30 291
-26 095
-30 748
-22 625
-8 210
Liabilities
26 213
35 733
37 257
22 335
-13 134
Financial derivatives
-2 194
-7 297
6 818
-3 192
2 228
Assets
25 434
11 654
22 341
20 865
29 767
Liabilities
-27 629
-18 951
-15 523
-24 057
-27 539
Other investment
1 986
20 100
-27 993
-11 603
23 606
Assets
20 658
5 844
-26 882
-4 823
28 123
Liabilities
-18 671
14 256
-1 111
-6 781
-4 517
Reserve assets
10 082
-12 842
10 423
1 289
1 315
NET ERRORS AND OMISSIONS
-1 212
-1 641
-1 450
-3 127
1 525

- nil or rounded to zero (including null cells)
(a) For sign conventions, see paragraphs 15-17 of the Explanatory Notes.

In seasonally adjusted current price terms, the September quarter 2018 current account deficit was $10,688m, a fall of $1,368m on the June quarter 2018 deficit.

In trend current price terms, the September quarter 2018 current account deficit was $10,170m, a fall of $1,255m on the June quarter 2018 deficit.

The contributors to the current account balance, in seasonally adjusted and trend terms at current prices, are shown in the following table.

BALANCE ON CURRENT ACCOUNT IN CURRENT PRICES - September Quarter 2018

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

Seasonally Adjusted

Balance on current account
-10 688
1 368
11.3
Balance on goods and services
6 607
2 704
69.3
Net goods
6 863
2 022
41.8
Net services
-256
682
72.7
Net primary income
-16 911
-1 162
-7.4
Net secondary income
-383
-172
-81.5

Trend

Balance on current account
-10 170
1 255
11.0
Balance on goods and services
6 625
2 008
43.5
Net goods
7 005
1 579
29.1
Net services
-380
429
53.0
Net primary income
-16 503
-718
-4.5
Net secondary income
-292
-35
-13.6



TERMS OF TRADE(footnote 1)

Australia's seasonally adjusted terms of trade on net goods and services for the September quarter 2018 rose 0.8% to 103.3, with an increase of 3.0% in the implicit price deflator (IPD) for goods and services credits and an increase of 2.2% in the IPD for goods and services debits.

In trend terms, the terms of trade for net goods and services rose 0.4% to 103.5.

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



BALANCE ON GOODS AND SERVICES

In seasonally adjusted chain volume terms, the balance on goods and services was a surplus of $2,853m, a rise of $1,603m on the June quarter 2018 surplus of $1,250m.

The net surplus on goods rose $592m on the June quarter 2018 surplus of $1,644m. Goods credits fell $869m (1%) and goods debits fell $1,461m (2%). The net surplus on services was a turnaround of $1,012m on the June quarter 2018 deficit of $395m.

The rise in the balance on goods and services surplus, in seasonally adjusted chain volume terms, is expected to contribute 0.4 percentage points to growth in the September quarter 2018 chain volume measure of GDP, assuming no significant revision to the GDP chain volume estimate for the June quarter 2018.

GOODS AND SERVICES, CHAIN VOLUME MEASURES (a)
Graph: This graphs shows movements in the Balance on Goods and Services series, the balance on goods series, and the balance on services series.



Goods

The trend estimate of net goods at current prices for the September quarter 2018 was a surplus of $7,005m, a rise of $1,579m on the June quarter 2018 surplus of $5,426m.

In seasonally adjusted terms at current prices, net goods was a surplus of $6,863m, a rise of $2,022m on the June quarter 2018 surplus of $4,841m.

GOODS, Price and volume analysis: Seasonally adjusted - September Quarter 2018

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

Exports
2 236
2.6
-1.1
3.8
Rural goods
288
2.4
0.5
1.8
Non-rural goods
1 983
3.0
-1.7
4.8
Net exports of goods under merchanting
40
266.7
250.8
4.5
Non-monetary gold
-77
-1.4
1.8
-3.2
Imports
214
0.3
-1.9
2.2
Consumption goods
-191
-0.7
-2.5
1.8
Capital goods
-208
-1.1
-2.2
1.2
Intermediate and other merchandise goods
1 123
3.5
0.2
3.2
Non-monetary gold
-512
-25.7
-22.7
-3.8

(a) Reference year 2016-17.
(b) Movements in indexes are based on data to four decimal places.


GOODS CREDITS

The trend estimate of goods credits at current prices rose $3,094m (4%) to $87,519m in the September quarter 2018.

In seasonally adjusted terms at current prices, goods credits rose $2,236m (3%) to $86,934m, with volumes down 1% and prices up 4%.


Rural Goods

Exports of rural goods, in seasonally adjusted terms at current prices, rose $288m (2%) to $12,380m, with volumes up 1% and prices up 2%.

The main components contributing to the rise were:
  • other rural, up $293m (5%), with volumes up 5% and prices up 1%
  • meat and meat preparations, up $186m (5%), with volumes up 3% and prices up 2%.

Partly offsetting these rises was cereal grains and cereal preparations, down $223m (11%), with volumes down 21% and prices up 13%.


Non-rural Goods

Exports of non-rural goods, in seasonally adjusted terms at current prices, rose $1,983m (3%) to $69,182m, with volumes down 2% and prices up 5%.

The main components contributing to the rise were:
  • other mineral fuels, up $1,720m (14%), with volumes up 2% and prices up 12%
  • metals (excl. non-monetary gold), up $553m (19%), with volumes up 21% and prices down 2%
  • coal, coke and briquettes, up $410m (3%), with volumes down 2% and prices up 4%
  • other manufactures, up $195m (4%), with volumes up 3%.

Partly offsetting these rises were:
  • metal ores and minerals, down $587m (2%), with volumes down 6% and prices up 3%
  • other non-rural (incl. sugar and beverages), down $397m (15%), with volumes down 14% and prices down 2%.
SELECTED MAJOR COMMODITIES, CURRENT PRICES (a)
Graph: This graph shows the movements of Metal ores and minerals Coal, coke and briguettes and Other mineral fuels



Net Exports of Goods Under Merchanting

Net exports of goods under merchanting, in seasonally adjusted terms at current prices, rose $40m to $55m, with prices up 5%.


Non-monetary Gold

Exports of non-monetary gold, in original and seasonally adjusted terms at current prices, fell $77m (1%) to $5,316m, with volumes up 2% and prices down 3%.


GOODS DEBITS

The trend estimate of goods debits at current prices rose $1,515m (2%) to $80,514m in the September quarter 2018.

In seasonally adjusted terms at current prices, goods debits rose $214m to $80,071m, with volumes down 2% and prices up 2%.


Consumption Goods

Imports of consumption goods, in seasonally adjusted terms at current prices, fell $191m (1%) to $25,827m, with volumes down 2% and prices up 2%.

The main components contributing to the fall were:
  • non-industrial transport equipment, down $223m (4%), with volumes down 4%
  • consumption goods n.e.s., down $64m (1%), with volumes down 4% and prices up 3%.

Partly offsetting these falls was food and beverages, mainly for consumption, up $84m (2%), with volumes up 2% and prices up 1%.


Capital Goods

Imports of capital goods, in seasonally adjusted terms at current prices, fell $208m (1%) to $19,172m, with volumes down 2% and prices up 1%.

The main components contributing to the fall were:
  • machinery and industrial equipment, down $170m (3%), with volumes down 4% and prices up 2%
  • civil aircraft and confidentialised items, down $113m (8%), with volumes down 12% and prices up 4%
  • industrial transport equipment n.e.s., down $87m (2%), with volumes down 3% and prices up 1%.

Partly offsetting these falls was telecommunications equipment, up $107m (3%), with volumes up 4% and prices down 1%.


Intermediate and Other Merchandise Goods

Imports of intermediate and other merchandise goods, in seasonally adjusted terms at current prices, rose $1,123m (3%) to $33,587m, with prices up 3%.

The main components contributing to the rise were:
  • fuels and lubricants, up $802m (8%), with volumes up 3% and prices up 5%
  • parts for transport equipment, up $102m (3%), with volumes up 1% and prices up 2%
  • primary industrial supplies n.e.s., up $101m (16%), with volumes up 28% and prices down 9%
  • other merchandise goods, up $90m, with volumes up 96% and prices up 2%.

Partly offsetting these rises was iron and steel, down $112m (11%), with volumes down 15% and prices up 6%.


Non-monetary Gold

Imports of non-monetary gold, in original and seasonally adjusted terms at current prices, fell $512m (26%) to $1,484m, with volumes down 23% and prices down 4%.


SERVICES

The trend estimate of net services at current prices was a deficit of $380m, a fall of $429m on the June quarter 2018 deficit of $809m.

In seasonally adjusted terms at current prices, net services was a deficit of $256m, a fall of $682m on the June quarter 2018 deficit of $938m.

SERVICES, Price and volume analysis: Seasonally adjusted - September Quarter 2018

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

Exports
1 155
5.0
4.5
0.5
Manufacturing services on physical inputs owned by others
-2
-100.0
-100.0
na
Maintenance and repair services n.i.e.
-1
-12.5
-12.7
0.2
Transport
60
3.1
1.8
1.2
Travel
945
6.4
5.8
0.6
Other services
154
2.5
2.4
0.1
Imports
474
2.0
-
2.0
Manufacturing services on physical inputs owned by others
-
-
-
-
Maintenance and repair services n.i.e.
60
41.1
37.8
2.4
Transport
-3
-0.1
-3.0
3.0
Travel
286
2.4
1.0
1.4
Other services
130
1.9
-0.4
2.3

- nil or rounded to zero (including null cells)
na not available
(a) Reference year 2016-17.
(b) Movements in indexes are based on data to four decimal places.


Services Credits

Services credits, in seasonally adjusted terms at current prices, rose $1,155m (5%) to $24,047m, with volumes up 5% and prices up 1%.

The main components contributing to the rise were:
  • travel, up $945m (6%), with volumes up 6% and prices up 1%
  • other services, up $154m (3%), with volumes up 2%.

In seasonally adjusted terms, tourism related services credits rose $946m (6%) to $16,468m.


Services Debits

Services debits, in seasonally adjusted terms at current prices, rose $474m (2%) to $24,304m, with prices up 2%.

The main components contributing to the rise were:
  • travel, up $286m (2%), with volumes up 1% and prices up 1%
  • other services, up $130m (2%), with prices up 2%.

In seasonally adjusted terms, tourism related services debits rose $237m (2%) to $14,167m.


PRIMARY INCOME

The trend estimate of the net primary income deficit at current prices rose $718m to $16,503m in the September quarter 2018.

In seasonally adjusted terms at current prices, the net primary income deficit rose $1,162m to $16,911m in the September quarter 2018.

NET PRIMARY INCOME
Graph: This graphs shows the trend and Seasonally adjusted movements for Net Primary Income



Primary Income Credits

Primary income credits, in seasonally adjusted terms at current prices, rose $517m (3%) to $16,173m. The main component of investment income contributing to the rise was portfolio investment assets, income on equity and investment fund shares, up $494m (9%).


Primary Income Debits

Primary income debits, in seasonally adjusted terms at current prices, rose $1,679m (5%) to $33,084m. The main component of investment income contributing to the rise was direct investment liabilities, income on equity and investment fund shares, up $1,454m (11%).


SECONDARY INCOME

The trend estimate of the net secondary income deficit at current prices rose $35m to $292m in the September quarter 2018.

In seasonally adjusted terms at current prices, the net secondary income deficit rose $172m to $383m in the September quarter 2018.


CAPITAL ACCOUNT

In original terms, the capital account deficit was $89m, a decrease of $43m on the June quarter 2018 deficit of $132m. Capital account credits decreased $43m (52%) and capital account debits decreased $86m (40%) in the September quarter 2018.


FINANCIAL ACCOUNT

The balance on the financial account, in original terms, recorded a net inflow of $11.2b, which was driven by a net inflow of equity of $8.0b and a net inflow of debt of $3.2b.

The financial account surplus decreased $2.7b from $13.9b in the June quarter 2018, to $11.2b in the September quarter 2018.


Direct Investment

Direct investment recorded a net inflow of $5.4b in the September quarter 2018, a decrease of $22.3b on the net inflow of $27.7b in the June quarter 2018, where:
  • direct investment liabilities recorded an inflow of $13.5b, a decrease of $21.6b on the inflow of $35.1b in the June quarter 2018
  • direct investment assets recorded an outflow of $8.1b, an increase of $0.7b on the outflow of $7.4b in the June quarter 2018.


Portfolio Investment

Portfolio investment recorded a net outflow of $21.3b in the September quarter 2018, an increase of $21.1b on the net outflow of $0.3b in the June quarter 2018, where:
  • equity and investment fund shares recorded a net outflow of $1.2b in the September quarter 2018, a decrease of $4.3b on the net outflow of $5.5b in the June quarter 2018
  • debt securities recorded a net outflow of $20.1b in the September quarter 2018, a turnaround of $25.3b on the net inflow of $5.2b in the June quarter 2018.


Financial Derivatives

Financial derivatives recorded a net inflow of $2.2b in the September quarter 2018, a turnaround of $5.4b on the net outflow of $3.2b in the June quarter 2018.


Other Investment

Other investment recorded a net inflow of $23.6b in the September quarter 2018, a turnaround of $35.2b on the net outflow of $11.6b in the June quarter 2018. This was driven by net inflows of $22.6b in loans and net outflows of $3.2b in currency and deposits.


Reserve Assets

Reserve assets remained steady at an inflow of $1.3b in the September quarter 2018.


INTERNATIONAL INVESTMENT POSITION (IIP)

Australia's net IIP liability position was $940.2b at 30 September 2018, a decrease of $17.3b on the revised 30 June 2018 position of $957.5b. Australia's net foreign debt liability position increased $12.6b to $1,044.0b. Australia's net foreign equity asset position increased $29.9b to $103.9b at 30 September 2018.

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

INTERNATIONAL INVESTMENT POSITION, By Net Foreign Equity and Net Foreign Debt

Changes in position reflecting
Position at beginning of period
Transactions
Price changes
Exchange rate changes
Other adjustments
Position at end of period
$m
$m
$m
$m
$m
$m

Net International Investment Position
Mar 2018
970 650
10 766
-7 165
-34 028
-4 848
935 375
Jun 2018
935 375
13 940
-5 415
14 514
-924
957 490
Sep 2018
957 490
11 205
-21 142
-4 767
-2 613
940 173
Net Foreign Equity
Mar 2018
-44 279
3 647
-4 074
-31 978
-6 639
-83 322
Jun 2018
-83 322
19 170
-3 685
-5 317
-816
-73 969
Sep 2018
-73 969
8 041
-17 192
-14 513
-6 225
-103 859
Net Foreign Debt
Mar 2018
1 014 928
7 119
-3 091
-2 050
1 790
1 018 697
Jun 2018
1 018 697
-5 230
-1 730
19 831
-108
1 031 459
Sep 2018
1 031 459
3 164
-3 949
9 746
3 612
1 044 032



SUPPLEMENTARY INFORMATION

CONDITIONS

The conditions in the global economy showed improving growth in Australia’s major trading partner countries in the September quarter 2018. 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 China (1.6%), Indonesia (1.3%), the USA (0.9%), the UK (0.6%), South Korea (0.6%), Spain (0.6%), France (0.4%), the Euro 28 (0.3%), Germany (-0.2%) and Japan (-0.3%) .
  • foreign asset transactions were $42.8b in the September quarter 2018 compared to -$12.7b in the revised June quarter 2018
  • foreign liability transactions were -$31.6b in the September quarter 2018 compared to $26.6b in the revised June quarter 2018.

The Australian share market, as measured by the MSCI global index(footnote 3) decreased 0.2% in the September quarter 2018, a turnaround from an increase of 8.3% in the June quarter 2018. Increases were recorded in the USA (7.0%), Indonesia (5.9%), Japan (5.5%), Switzerland (5.4%), Malaysia (5.2%), New Zealand (3.8%), France (3.3%), India (2.9%) and Singapore (0.5%). Decreases were recorded in China (8.6%), Hong Kong (2.0%), the UK (1.5%), Canada (1.5%) and Germany (0.1%). A market price change of -$17.4b was recorded for foreign equity assets and $0.2b for foreign equity liabilities in the September quarter 2018.

According to Thomson Reuters(footnote 4) , the composite corporate benchmark yields increased in the USA from 4.07% to 4.11%, the UK from 2.49% to 2.62%, Germany from 1.06% to 1.15%, Japan from 0.31% to 0.38% and Australia from 3.31% to 3.35% in the September quarter 2018. The long-term 10 year government bond yields increased in the USA from 2.85% to 3.05%, the UK from 1.28% to 1.57%, Germany from 0.31% to 0.47% and Japan from 0.03% to 0.13%. The yields decreased in Australia from 2.70% to 2.63% over the September quarter 2018. A market price change of $1.7b was recorded for portfolio debt securities assets and -$5.7b in portfolio debt securities liabilities in the September quarter 2018.

The Australian dollar saw mixed movement against major currencies in the September quarter 2018. The Australian dollar depreciated 4.04% against the Swiss franc, 3.75% against the Canadian dollar, 2.89% against the Swedish krona, 2.75% against the South Korean won, 2.55% against the Hong Kong dollar, 2.29% against the US dollar, 2.27% against the European Euro, 2.04% against the UK pound sterling and 2.03% against the Singapore dollar. The dollar appreciated 3.37% against the Indian rupee, 1.68% against the Chinese renminbi, 1.37% against the Indonesian rupiah, 0.53% against the South African rand, 0.17% against the Japanese yen and 0.17% against the New Zealand dollar. The Trade Weighted Index (TWI)(footnote 5) fell 0.64% to 62.20 in the September quarter 2018. These movements were reflected in exchange rate changes for foreign assets of -$27.5b and foreign liabilities of $22.7b in the September quarter 2018.

RELATIONSHIP BETWEEN IPD, EPI AND IPI(footnote 6)

In original terms, the IPD for total goods credits rose 3.9% and the chain Laspeyres price index for goods exports rose 3.6%. The Export Price Index (EPI)(footnote 7) rose 3.7% during the September quarter 2018.

In original terms, the IPD for total goods debits rose 2.1% and the chain Laspeyres price index for goods imports rose 2.1%. The Import Price Index (IPI)(footnote 7) rose 1.9% during the September quarter 2018.

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.

GOODS AND SERVICES, Price comparison - September Quarter 2018

Change in:
Seasonally adjusted
Original
Implicit price deflators(a)
Implicit price deflators(a)
International trade price indexes(b)
Chain Laspeyres price indexes(a)
%
%
%
%

Exports
Goods
3.8
3.9
3.7
3.6
Services
0.5
0.5
na
0.5
Imports
Goods
2.2
2.1
1.9
2.1
Services
2.0
2.0
na
2.0

na not available
(a) Reference year 2016-17 = 100.
(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 (average monthly index) for rural commodities rose 5.4% between the June quarter 2018 and the September quarter 2018 while the EPI for rural goods rose 3.5%.

The RBA Commodity Price Index for non-rural commodities rose 3.1% between the June quarter 2018 and the September quarter 2018 while the EPI for non-rural goods (excluding non-monetary gold) rose 4.3%.

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.


FOOTNOTES
1 In this commentary movements in indexes are based on data to four decimal places. <back
2 OECD Statistics Quarterly National Accounts, Organisation for Economic Cooperation and Development – Economic Department, viewed 28 November 2018 <back
3 MSCI Global Market Indexes 2018, Morgan Stanley Capital International, viewed 5 October 2018. <back
4 Thomson Reuters, viewed 3 October 2018. <back
5 Exchange Rates – Daily 2014 to Current, Reserve Bank of Australia - Statistical Tables, viewed 3 October 2018. <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