ANALYSIS AND COMMENTS

INTERNATIONAL INVESTMENT POSITION

Australia’s net international investment liability position at 31 December 2012 was $870.0 billion, an increase of $36.5 billion on the previous year.


Level of Foreign investment in Australia

The level of foreign investment in Australia increased by $147.5 billion to reach $2,167.7 billion at 31 December 2012. Portfolio investment accounted for $1,238.2 billion (57%), direct investment for $549.6 billion (25%), other investment for $286.0 billion (13%) and financial derivatives for $93.9 billion (4%). Of the portfolio investment liabilities, debt securities accounted for $884.7 billion (41%) and equity securities for $353.4 billion (16%).

The leading investor countries at 31 December 2012 were:

• United States of America ($617.6 billion or 28%)
• United Kingdom ($496.4 billion or 23%)
• Japan ($126.4 billion or 6%)
• Singapore ($55.9 billion or 3%)
• Switzerland ($49.2 billion or 2%)
• Hong Kong (SAR of China) ($42.1 billion or 2%).

In addition, the level of borrowing raised on international capital markets (e.g. Eurobonds) was $37.0 billion or 2%.

The following graph illustrates the percentage share, by leading countries, of the total level of foreign investment in Australia at 31 December 2012.


Level of Australian investment abroad

The level of Australian investment abroad reached $1,297.6 billion at 31 December 2012, an increase of $111.1 billion on the previous year. Portfolio investment accounted for $515.4 billion (40%), direct investment for $370.8 billion (29%), other investment for $259.0 billion (20%), financial derivatives for $105.1 billion (8%) and reserve assets for $47.3 billion (4%).

The leading investment destination countries as at 31 December 2012 were:

• United States of America ($434.0 billion or 33%)
• United Kingdom ($217.9 billion or 17%)
• New Zealand ($77.5 billion or 6%)
• Germany ($48.9 billion or 4%)
• Canada ($42.7 billion or 3%)
• Japan ($39.1 billion or 3%).

The following graph illustrates the percentage share, by leading countries, of the total level of Australian investment abroad at 31 December 2012.



FINANCIAL ACCOUNT TRANSACTIONS

The balance on financial account for the year ended 31 December 2012 recorded a net inflow (surplus) of $55.3 billion. This result is up $23.0 billion on the net inflow of $32.3 billion recorded for the previous year.


Foreign investment in Australia – Transactions

Foreign investment in Australia recorded a net inflow of $93.5 billion for the year ended 31 December 2012, an increase of $10.0 billion on the net inflow of $83.5 billion for the previous year.

The leading countries recording net inflows during 2012 were:

• United States of America ($43.7 billion or 47%)
• Japan ($12.0 billion or 13%)
• Canada ($4.0 billion or 4%).

Partly offsetting these, net outflows were recorded for the following countries:

• United Kingdom ($11.8 billion or 13%)
• Belgium ($6.9 billion or 7%)
• France ($4.2 billion or 5%).

The following graph illustrates the percentage share, by leading countries, of net financial transactions for foreign investment in Australian during the year ended 31 December 2012.




Australian investment abroad – Transactions

Australian investment abroad recorded a net outflow of $38.2 billion for the year ended 31 December 2012, a decrease of $13.0 billion on the net outflow of $51.2 billion for the previous year.

The leading countries recording net outflows during 2012 were:

• Germany ($6.2 billion or 16%)
• Hong Kong (SAR of China) ($3.2 billion or 8%)
• Japan ($2.8 billion or 7%)
• Canada ($2.6 billion or 7%)
• Malaysia ($2.0 billion or 5%).

Partly offsetting these, a net inflow was recorded for the following country:

• United States of America ($7.3 billion or 19%).

The following graph illustrates the percentage share, by leading countries, of net financial transactions for Australian investment abroad during the year ended 31 December 2012.


INCOME

Income debits totalled $74.4 billion for the year ended 31 December 2012. This is down $13.6 billion on income debits in the previous year. The main countries to which income accrued for the year ended 31 December 2012 were:

• United States of America ($16.5 billion or 22%)
• Japan ($8.0 billion or 11%)
• United Kingdom ($7.6 billion or 10%)
• Switzerland ($2.6 billion or 4%)
• Singapore ($1.4 billion or 2%).

Income credits totalled $39.0 billion for the year ended 31 December 2012. This is down $0.6 billion on income credits in the previous year. The main countries from which income accrued for the year ended 31 December 2012 were:

• United States of America ($8.0 billion or 21%)
• United Kingdom ($4.5 billion or 11%)
• New Zealand ($4.1 billion or 10%)
• Singapore ($1.8 billion or 5%)
• Canada ($1.7 billion or 4%).