5302.0 - Balance of Payments and International Investment Position, Australia, Mar 2010 Quality Declaration 
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 31/05/2010   
   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

The trend estimate of the balance on current account for the March quarter 2010 was a deficit of $17,631m in current price terms. This was an increase of $957m (6%) on the deficit recorded for the December quarter 2009 where:

  • the goods and services deficit rose $666m (14%) to $5,553m
  • the primary income deficit rose $306m (3%) to $11,904m
  • the secondary income deficit fell $16m (8%) to $173m.

In seasonally adjusted current price terms, the current account deficit fell $1,917m (10%) to $16,551m between the December quarter 2009 and March quarter 2010 where:
  • the goods and services deficit fell $989m (18%) to $4,618m
  • the primary income deficit fell $945m (7%) to $11,754m
  • the secondary income deficit rose $18m (11%) to $180m.


Goods and Services

The trend estimate of the balance on goods and services at current prices was a deficit of $5,553m, an increase of $666m (14%) on the December quarter 2009 deficit.

In seasonally adjusted terms, the balance on goods and services was a deficit of $4,618m, a decrease of $989m (18%) on the December quarter 2009 deficit where:
  • the net goods deficit fell $957m (19%) to $4,040m
  • the net services deficit fell $32m (5%) to $578m.

The decrease in the goods deficit resulted from an increase in goods credits (exports), up $1,724m (4%) exceeding an increase in goods debits (imports), up $766m (2%).

Contributing to the increase in goods credits were:
  • non-rural goods, up $1,289m (4%)
  • rural goods, up $430m (7%).

Contributing to the increase in goods debits were:
  • intermediate and other merchandise goods, up $619m (3%)
  • consumption goods, up $336m (2%)
  • capital goods, up $177m (1%).

Partly offsetting these increases was non-monetary gold, down $365m (21%).

The decrease in the services deficit resulted from an increase in services credits, up $390m (3%) exceeding the increase in services debits, up $358m (3%).

In seasonally adjusted volume terms, the balance on goods and services was a deficit of $7,983m, an increase of $1,503m (23%) on the December quarter 2009 deficit. The net deficit on goods increased $1,320m (28%). Goods credits fell $637m (1%) and goods debits rose $683m (1%). The net services balance was a deficit of $1,914m, an increase of $184m (11%) on the December quarter 2009 deficit.

The increase of $1,503m in the deficit on goods and services in seasonally adjusted volume terms is expected to detract 0.5 percentage points from growth in the March quarter 2010 volume measure of GDP, assuming no significant revision to the GDP chain volume estimate for the December quarter 2009.

Goods and Services, CHAIN VOLUME MEASURES (a)
Graph: Goods and Services, CHAIN VOLUME MEASURES (a)



Goods Credits

The trend estimate of goods credits at current prices rose $752m (2%) to $46,437m in the March quarter 2010.

In seasonally adjusted terms at current prices, goods credits rose $1,724m (4%) to $47,417m.

Exports of rural goods, in seasonally adjusted terms at current prices, rose $430m (7%) to $6,363m, with volumes up 3% and prices up 4%. The largest increases were in:
  • other rural, rose $232m (9%), with volumes down 3% and prices up 12%
  • cereal grains and cereal preparations, rose $110m (9%), with volumes up 20% and prices down 9%.

Exports of non-rural goods, in seasonally adjusted terms at current prices, rose $1,289m (4%) to $37,648m, with volumes down 2% and prices up 6%. The largest increases were in:
  • metal ores and minerals, up $1,133m (10%), with volumes up 2% and prices up 8%
  • other mineral fuels, up $402m (9%), with volumes down 2% and prices up 11%.

These increases were partly offset by coal, coke and briquettes, down $593m (7%), with volumes down 10% and prices up 3%.

Net exports of goods under merchanting, in seasonally adjusted terms at current prices, rose $24m (53%) to $69m, with volumes up 47% and prices up 5%.

Exports of non-monetary gold, in seasonally adjusted terms at current prices, fell $20m (1%) to $3,336m, with volumes down 1% and prices up 1%.

Goods Credits, CHAIN VOLUME MEASURES (a)
Graph: Goods Credits, CHAIN VOLUME MEASURES (a)



Goods Debits

The trend estimate of goods debits at current prices rose $1,129m (2%) to $51,364m in the March quarter 2010.

In seasonally adjusted terms at current prices, goods debits rose $766m (2%) to $51,456m.

Imports of consumption goods, in seasonally adjusted terms at current prices, rose $336m (2%) to $15,530m, with volumes up 1% and prices up 2%. The largest increases were in:
  • non-industrial transport equipment, up $283m (7%), with volumes up 7%
  • textiles, clothing and footwear, up $248m (15%), with volumes up 14%.

Partly offsetting these increases was household electrical items, down $111m (8%), with volumes down 13% and prices up 5%.

Imports of capital goods, in seasonally adjusted terms at current prices, rose $177m (1%) to $12,011m with volumes up 2%. The largest increases were in:
  • industrial transport equipment n.e.s, up $201m (13%), with volumes up 10% and prices up 2%
  • ADP equipment, up $104m (6%), with volumes up 7% and prices down 1%.

Partly offsetting these increases was machinery and industrial equipment, down $95m (3%), with volumes down 3% and prices up 1%.

Imports of intermediate and other merchandise goods, in seasonally adjusted terms at current prices, rose $619m (3%) to $22,502m with volumes up 3%. The largest increases were in:
  • other merchandise goods, up $320m with volumes up 110%
  • processed industrial supplies n.e.s, up $293m (6%), with volumes up 8% and prices down 2%
  • parts for transport equipment, up $169m (8%), with volumes up 7% and prices up 1%.

Imports of non-monetary gold, in seasonally adjusted terms at current prices, fell $365m (21%) to $1,413m, with volumes down 22% and prices up 2%.

Goods Debits, CHAIN VOLUME MEASURES (a)
Graph: Goods Debits, CHAIN VOLUME MEASURES (a)



Services

The trend estimate of net services at current prices was a deficit of $626m, an increase of $290m (86%) on the revised December quarter 2009 deficit of $336m.

In seasonally adjusted terms at current prices, net services recorded a deficit of $578m, a decrease of $32m (5%) on the revised December quarter 2009 deficit of $610m.

Services credits, in seasonally adjusted terms at current prices, rose $390m (3%) to $13,660m. The largest increases were in:
  • other services, up $209m (7%), with volumes up 6% and prices up 1%
  • travel services, up $197m (2%), with volumes up 2%.

Services debits, in seasonally adjusted terms at current prices, rose $358m (3%) to $14,238m. The largest increases were in:
  • other services, up $251m (6%), with volumes up 7% and prices down 1%.
  • travel services, up $95m (2%), with volumes up 2%
  • maintenance and repair services n.i.e., up $18m (26%), with volumes up 27% and prices down 1%.

In seasonally adjusted terms at current prices, tourism related services credits rose $189m (2%) to $9,223m, and tourism related services debits rose $47m (1%) to $7,570m.


IMPLICIT PRICE DEFLATOR(footnote 1)

In seasonally adjusted terms, the implicit price deflator (IPD) for total goods and services credits rose 4.1%. In original terms, it increased 4.0% and the chain Laspeyres price index for goods and services credits rose 4.0%. In original terms, the IPD for goods credits rose 5.0% and the IPD for services credits rose 0.3%.

In seasonally adjusted terms, the IPD for total goods and services debits remained steady. In original terms, it decreased 0.1% while the chain Laspeyres price index for goods and services debits remained steady. In original terms, the IPD for goods debits rose 0.1% and the IPD for services debits fell 0.9%.

Implicit Price Deflator, (a)
Graph: Implicit Price Deflator, (a)



Relationship to IPI and EPI

In original terms, the implicit price deflator (IPD) for total goods credits rose 5.0% and the chain Laspeyres price index for goods exports rose 5.1%. The export price index (EPI) rose 3.8% during the March quarter 2010.

The difference between the EPI and IPD is mainly driven by other mineral fuels. Differences in these two measures result from differences in pricing points, coverage and weights.

In original terms, the implicit price deflator for total goods debits rose 0.1% and the chain Laspeyres price index for goods imports rose 0.3%. The import price index (IPI) rose 0.3% during the March quarter 2010.


Terms of Trade

Australia's seasonally adjusted terms of trade rose 4.2% to 105.3 with an increase of 4.1% in the IPD for goods and services credits and the goods and services debits IPD remained steady. The trend estimate of the terms of trade increased 3.6% to 104.6.


Primary Income

The trend estimate of the net primary income deficit increased $306m (3%) from $11,598m in the December quarter 2009 to $11,904m in the March quarter 2010.

In seasonally adjusted terms the net primary income deficit decreased $945m (7%) from $12,699m in the December quarter 2009 to $11,754m in the March quarter 2010. Primary income credits increased $1,634m (21%) to $9,531m and primary income debits increased $689m (3%) to $21,285m.

The main contributors to the increase in primary income credits were:
  • a $1,253m (40%) increase in income on direct investment assets
  • a $426m (11%) increase in income on portfolio investment assets, particularly the equity and investment fund shares.

The main contributors to the increase in primary income debits were:
  • a $502m (6%) increase in income on direct investment liabilities
  • a $245m (2%) increase in income on portfolio investment liabilities.

In original terms the primary income deficit decreased $901m (7%) to $11,390m in the March quarter 2010. Primary income credits increased $1,936m (25%) to $9,680m and primary income debits increased $1,033m (5%) to $21,069m.

NET PRIMARY INCOME
Graph: NET PRIMARY INCOME



Secondary Income

In seasonally adjusted terms, the net secondary income balance was a deficit of $180m, an increase of $18m (11%) on the December quarter 2009 deficit of $162m. Secondary income credits rose $13m (1%) and secondary income debits rose $30m (2%) in the March quarter 2010.


CAPITAL ACCOUNT

In original terms, the capital account deficit was $37m, up $13m (54%) on the December quarter 2009 deficit of $24m.


FINANCIAL ACCOUNT

The balance on financial account recorded a net inflow of $15.3b, with a net inflow $20.3b of debt and a net outflow of $4.9b of equity.

The financial account surplus decreased $4.7b from $20.0b in the December quarter 2009 to $15.3b in the March quarter 2010 in line with the decrease in the current account deficit, which fell $4.0b from $19.6b last quarter to $15.6b this quarter.

Net debt securities issued decreased $9.7b from $53.4b in the December quarter 2009 to $43.7b in the March quarter 2010. The main contributors were:
  • deposit-taking corporations, except the central bank, contributing $26.4b
  • general government, contributing $16.8b.

Direct investment recorded a net inflow of $5.1b in the March quarter 2010, an increase of $0.4b from the net inflow of $4.7b in the December quarter 2009, where:
  • direct investment assets recorded an outflow of $0.6b, a decrease of $4.3b on the outflow of $4.9b in the December quarter 2009
  • direct investment liabilities recorded an inflow of $5.8b, a decrease of $3.9b on the inflow of $9.6b in the December quarter 2009.

Portfolio investment recorded a net inflow $21.5b, an increase of $6.4b on the net inflow of $15.1b in the December quarter 2009. This was driven by:
  • debt securities recording a net inflow of $31.4b
  • equity and investment fund shares recording a net outflow of $9.9b.

Financial derivatives recorded a net inflow of $8.1b, a turnaround from the net outflow of $7.8b in the December quarter 2009.

Other investment recorded a net outflow of $22.7b, a turnaround of $29.5b from a net inflow of $6.8b in the December quarter 2009.


INTERNATIONAL INVESTMENT POSITION


INTERNATIONAL INVESTMENT

Australia's net international investment position at 31 March 2010 was a net foreign liability of $757.2b, down $5.5b (1%) on 31 December 2009 figure of $762.7b. The decrease consisted of:
  • price changes of -$18.3b
  • other changes of -$1.7b
  • exchange rate changes of -$0.8b
  • net transactions of $15.3b.

During the March quarter 2010 Australia's net foreign equity liabilities fell $11.3b (10%) to $103.0b. This decrease was due to:
  • price changes of -$10.5b
  • other changes of -$5.1b
  • net transactions of -$4.9b
  • exchange rate changes of $9.2b.

During the March quarter 2010 Australia's net foreign debt liability increased $5.8b (1%) to $654.3b. This increase was due to:
  • transactions of $20.3b
  • other changes of $3.4b
  • exchange rate changes of -$10.0b
  • price changes of -$7.8b.

1 In this commentary movements in indexes are based on data to four decimal places. <back