Australia becomes a net lender to overseas for the first time in 44 years
In seasonally adjusted terms, Australia became a net lender to overseas this quarter. This is the first time since June quarter 1975 that Australia has been a net lender as opposed to a net borrower. The ratio of net lending to overseas to GDP was 1.1% this quarter.
Graph 1. National net lending (net borrowing), relative to GDP, seasonally adjusted
At a sector level, net borrowing by general government declined to its lowest level since September 2008, driven by sustained increases in saving. Non-financial corporations' net borrowing has also continued to decline in line with slowing investment in non-residential buildings and structures. Households recorded a small increase in net borrowing this quarter, however the level remains lower than it was a year ago, driven by weaker investment in dwellings.
Graph 2. Net lending (net borrowing), by sector, seasonally adjusted
National capital investment continues to fall
Household investment as a proportion of GDP has now declined for four consecutive quarters. This decline continues to be driven by weakness in dwelling investment in line with soft housing market conditions.
Capital investment by non-financial corporations as a proportion of GDP was broadly unchanged this quarter. Machinery and equipment rose strongly on the back of continued investment in autonomous machinery by large mining companies. However, this was offset by softness in non-residential building investment with the completion of projects outstripping commencements this quarter. New engineering construction was also weak, continuing to be impacted by liquified natural gas projects transitioning from construction into the production phase.
General government investment as a proportion of GDP fell slightly to 3.6% this quarter. from 3.8% in March 2019. Despite the fall this quarter, the ratio has been trending up since mid-2015, reflecting increased public infrastructure investment by state and local general governments to support population growth and growing demand for public services.
Graph 3. Gross fixed capital formation, by sector, relative to GDP, seasonally adjusted