5302.0 - Balance of Payments and International Investment Position, Australia, Jun 2019 Quality Declaration 
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Analysis and comments

Balance of payments

In original current price terms, the June quarter 2019 current account surplus was $7,494m, a turnaround of $7,546m on the March quarter 2019 deficit. In original current price terms, the balance on goods and services was a net surplus of $19,707m, primary income was a net deficit of $11,901m and secondary income was a net deficit of $312m.

In original current price terms, the June quarter 2019 capital and financial account deficit was $4,163m, a turnaround of $7,593m on the March quarter 2019 surplus. In original current price terms, the capital account was a net deficit of $234m and the financial account was a net deficit of $3,929m.

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

Jun 2018
Sep 2018
Dec 2018
Mar 2019
Jun 2019
$m
$m
$m
$m
$m

Current account
-10 820
-12 763
-6 681
-52
7 494
Goods and services
3 474
5 490
8 415
16 571
19 707
Credits
105 581
111 936
118 109
116 801
123 045
Debits
-102 107
-106 446
-109 694
-100 230
-103 338
Goods
6 059
8 721
9 512
13 945
21 734
Credits
84 557
89 043
93 487
90 290
100 284
Debits
-78 498
-80 322
-83 975
-76 345
-78 550
Services
-2 585
-3 231
-1 097
2 626
-2 027
Credits
21 024
22 893
24 622
26 511
22 761
Debits
-23 609
-26 124
-25 719
-23 885
-24 788
Primary income
-13 792
-17 968
-15 178
-15 860
-11 901
Credits
16 115
16 455
17 691
18 009
17 587
Debits
-29 907
-34 422
-32 869
-33 869
-29 488
Secondary income
-502
-285
82
-763
-312
Credits
2 338
2 345
2 375
2 315
2 390
Debits
-2 840
-2 630
-2 293
-3 078
-2 702
Capital and financial account
13 616
15 480
8 845
3 430
-4 163
Capital account
-134
-175
-162
-200
-234
Acquisitions/disposals of non-produced non-financial assets
32
3
33
3
1
Credits
80
3
63
3
1
Debits
-48
-
-30
-
-
Capital transfers
-166
-178
-195
-203
-235
Credits
-
-
-
-
-
Debits
-166
-178
-195
-203
-235
Financial account
13 750
15 655
9 007
3 630
-3 929
Direct investment
28 257
5 669
34 481
4 771
23 852
Assets
-8 323
-10 247
23 254
-6 349
2 874
Liabilities
36 580
15 916
11 227
11 120
20 979
Portfolio investment
318
-16 497
-7 775
-21 873
-35 734
Assets
-22 323
-4 267
-23 987
-11 928
-20 891
Liabilities
22 641
-12 230
16 211
-9 945
-14 843
Financial derivatives
-5 854
-877
-5 553
-655
-1 362
Assets
19 875
29 693
10 375
18 167
17 162
Liabilities
-25 729
-30 569
-15 928
-18 822
-18 524
Other investment
-10 259
26 044
-13 469
23 233
6 321
Assets
-3 127
27 422
-5 516
17 451
-3 905
Liabilities
-7 132
-1 378
-7 954
5 782
10 226
Reserve assets
1 289
1 315
1 324
-1 846
2 992
Net errors and omissions
-2 796
-2 717
-2 164
-3 378
-3 331

- 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 June quarter 2019 current account surplus was $5,853m, a turnaround of $6,973m on the March quarter 2019 deficit.

In trend current price terms, the June quarter 2019 current account surplus was $4,758m, a turnaround of $5,398m on the March quarter 2019 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 - June quarter 2019

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

Seasonally adjusted

Balance on current account
5 853
6 973
(a) ..
Balance on goods and services
19 896
5 060
34.1
Net goods
20 358
5 038
32.9
Net services
-462
22
4.5
Net primary income
-13 927
1 573
10.1
Net secondary income
-116
340
74.6

Trend

Balance on current account
4 758
5 398
(a) ..
Balance on goods and services
19 281
4 588
31.2
Net goods
19 714
4 251
27.5
Net services
-433
337
43.8
Net primary income
-14 273
729
4.9
Net secondary income
-249
82
24.8

.. not applicable
(a) see paragraph 17 of Explanatory Notes.


Terms of trade (footnote 1)

Australia's seasonally adjusted terms of trade on net goods and services for the June quarter 2019 rose 1.4% to 111.6, with an increase of 2.5% in the implicit price deflator (IPD) for goods and services credits and an increase of 1.1% in the IPD for goods and services debits.

In trend terms, the terms of trade for net goods and services rose 2.2% to 112.0.


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 $6,387m, a rise of $2,750m on the March quarter 2019 surplus of $3,637m.

The net surplus on goods rose $2,435m on the March quarter 2019 surplus of $2,883m. Goods credits rose $1,335m (2%) and goods debits fell $1,099m (1%). The net surplus on services rose $315m on the March quarter 2019 surplus of $754m.

The rise in the balance on goods and services surplus, in seasonally adjusted chain volume terms, is expected to contribute 0.6 percentage points to growth in the June quarter 2019 chain volume measure of GDP, assuming no significant revision to the GDP chain volume estimate for the March quarter 2019.


Goods and services , Chain volume measures (a)



Goods

The trend estimate of net goods at current prices for the June quarter 2019 was a surplus of $19,714m, a rise of $4,251m on the March quarter 2019 surplus of $15,463m.

In seasonally adjusted terms at current prices, net goods was a surplus of $20,358m, a rise of $5,038m on the March quarter 2019 surplus of $15,320m.

Goods, price and volume analysis: seasonally adjusted - June quarter 2019

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

Exports
4 578
4.8
1.7
3.0
Rural goods
-489
-4.0
-4.3
0.4
Non-rural goods
5 655
7.3
4.0
3.2
Net exports of goods under merchanting
-16
-22.9
-33.4
15.8
Non-monetary gold
-573
-10.3
-12.0
2.0
Imports
-460
-0.6
-1.5
0.9
Consumption goods
-529
-2.0
-2.9
0.9
Capital goods
-47
-0.2
-0.5
0.3
Intermediate and other merchandise goods
-48
-0.1
-1.4
1.2
Non-monetary gold
165
12.4
10.0
2.1

(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 $4,130m (4%) to $99,601m in the June quarter 2019.

In seasonally adjusted terms at current prices, goods credits rose $4,578m (5%) to $99,957m, with volumes up 2% and prices up 3%.


Rural goods

Exports of rural goods, in seasonally adjusted terms at current prices, fell $489m (4%) to $11,809m, with volumes down 4%.

The main components contributing to the fall were:
  • other rural, down $331m (6%), with volumes down 4% and prices down 1%
  • cereal grains and cereal preparations, down $128m (8%), with volumes down 3% and prices down 5%
  • wool and sheepskins, down $101m (9%), with volumes down 11% and prices up 2%.

Partly offsetting these falls was meat and meat preparations, up $69m (2%), with volumes down 3% and prices up 5%.


Non-rural goods

Exports of non-rural goods, in seasonally adjusted terms at current prices, rose $5,655m (7%) to $83,091m, with volumes up 4% and prices up 3%.

The main components contributing to the rise were:
  • metal ores and minerals, up $5,842m (21%), with volumes up 1% and prices up 20%
  • other non-rural (incl. sugar and beverages), up $311m (12%), with volumes up 11% and prices up 1%
  • other manufactures, up $232m (4%), with volumes up 4%
  • metals (excl. non-monetary gold), up $211m (6%), with volumes up 6%.

Partly offsetting these rises were:
  • other mineral fuels, down $748m (5%), with volumes up 11% and prices down 14%
  • coal, coke and briquettes, down $329m (2%), with volumes up 4% and prices down 5%.


Selected major commodities, Current prices (a)



Net exports of goods under merchanting

Net exports of goods under merchanting, in seasonally adjusted terms at current prices, fell $16m (23%) to $54m, with volumes down 33% and prices up 16%.


Non-monetary gold

Exports of non-monetary gold, in original and seasonally adjusted terms at current prices, fell $573m (10%) to $5,002m, with volumes down 12% and prices up 2%.


Goods debits

The trend estimate of goods debits at current prices fell $121m to $79,887m in the June quarter 2019.

In seasonally adjusted terms at current prices, goods debits fell $460m (1%) to $79,599m, with volumes down 1% and prices up 1%.


Consumption goods

Imports of consumption goods, in seasonally adjusted terms at current prices, fell $529m (2%) to $25,946m, with volumes down 3% and prices up 1%.

The main component contributing to the fall was non-industrial transport equipment, down $658m (11%), with volumes down 11%.

Partly offsetting this fall was food and beverages, mainly for consumption, up $120m (3%), with prices up 3%.


Capital goods

Imports of capital goods, in seasonally adjusted terms at current prices, fell $47m to $19,618m.

The main components contributing to the fall were:
  • industrial transport equipment n.e.s., down $448m (12%), with volumes down 10% and prices down 2%
  • machinery and industrial equipment, down $139m (2%), with volumes down 3% and prices up 1%.

Partly offsetting these falls were:
  • civil aircraft and confidentialised items, up $382m (36%), with volumes up 33% and prices up 3%
  • capital goods n.e.s., up $250m (12%), with volumes up 11%.


Intermediate and other merchandise goods

Imports of intermediate and other merchandise goods, in seasonally adjusted terms at current prices, fell $48m to $32,538m, with volumes down 1% and prices up 1%.

The main components contributing to the fall were:
  • iron and steel, down $121m (13%), with volumes down 13%
  • primary industrial supplies n.e.s., down $119m (24%), with volumes down 22% and prices down 3%
  • processed industrial supplies n.e.s., down $117m (1%), with volumes down 1%.

Partly offsetting these falls was fuels and lubricants, up $231m (2%), with volumes down 1% and prices up 3%.


Non-monetary gold

Imports of non-monetary gold, in original and seasonally adjusted terms at current prices, rose $165m (12%) to $1,498m, with volumes up 10% and prices up 2%.


Services

The trend estimate of net services at current prices was a deficit of $433m, a fall of $337m on the March quarter 2019 deficit of $770m.

In seasonally adjusted terms at current prices, net services was a deficit of $462m, a fall of $22m on the March quarter 2019 deficit of $484m.


Services, price and volume analysis: seasonally adjusted - June quarter 2019

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

Exports
202
0.8
0.4
0.4
Manufacturing services on physical inputs owned by others
-
-
-
-
Maintenance and repair services n.i.e.
-3
-21.4
-21.4
-
Transport
27
1.4
1.0
0.3
Travel
338
2.1
1.7
0.5
Other services
-160
-2.4
-2.5
0.2
Imports
180
0.7
-0.9
1.7
Manufacturing services on physical inputs owned by others
-
-
-
-
Maintenance and repair services n.i.e.
-33
-10.8
-12.8
2.2
Transport
13
0.3
-0.8
1.0
Travel
67
0.5
-1.0
1.6
Other services
132
1.8
-0.4
2.2

- nil or rounded to zero (including null cells)
(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 $202m (1%) to $24,794m.

The main component contributing to the rise was travel, up $338m (2%), with volumes up 2%.

Partly offsetting this rise was other services, down $160m (2%), with volumes down 3%.

In seasonally adjusted terms, tourism related services credits rose $348m (2%) to $16,969m.


Services debits

Services debits, in seasonally adjusted terms at current prices, rose $180m (1%) to $25,256m, with volumes down 1% and prices up 2%.

The main component contributing to the rise was other services, up $132m (2%), with prices up 2%.

Partly offsetting this rise was maintenance and repair services n.i.e., down $33m (11%), with volumes down 13% and prices up 2%.

In seasonally adjusted terms, tourism related services debits rose $129m (1%) to $14,757m.


Primary income

The trend estimate of the net primary income deficit at current prices fell $729m to $14,273m in the June quarter 2019.

In seasonally adjusted terms at current prices, the net primary income deficit fell $1,573m to $13,927m in the June quarter 2019.


Net primary income



Primary income credits

Primary income credits, in seasonally adjusted terms at current prices, fell $868m (5%) to $17,373m. The main component of investment income contributing to the fall was direct investment assets, income on equity and investment fund shares, down $920m (14%).


Primary income debits

Primary income debits, in seasonally adjusted terms at current prices, fell $2,440m (7%) to $31,300m. The main components of investment income contributing to the fall were direct investment liabilities, income on equity and investment fund shares, down $1,621m (10%) and portfolio investment liabilities, interest, down $1,074m (16%).


Secondary income

The trend estimate of the net secondary income deficit at current prices fell $82m to $249m in the June quarter 2019.

In seasonally adjusted terms at current prices, the net secondary income deficit fell $340m to $116m in the June quarter 2019.


Capital account

In original terms, the capital account deficit was $234m, an increase of $34m on the March quarter 2019 deficit of $200m. Capital account credits decreased $2m (67%) and capital account debits increased $32m (16%) in the June quarter 2019.


Financial account

The balance on the financial account, in original terms, recorded a deficit of $3.9b in the June quarter 2019, a turnaround of $7.6b on the surplus of $3.6b in the March quarter 2019. The net outflow of $3.9b was driven by a net outflow of debt of $10.6b and a net inflow of equity of $6.7b.


Direct investment

Direct investment recorded a net inflow of $23.9b in the June quarter 2019, an increase of $19.1b on the net inflow of $4.8b in the March quarter 2019, where:

  • direct investment liabilities recorded an inflow of $21.0b, an increase of $9.9b on the inflow of $11.1b in the March quarter 2019
  • direct investment assets recorded an inflow of $2.9b, a turnaround of $9.2b on the outflow of $6.3b in the March quarter 2019.


Portfolio investment

Portfolio investment recorded a net outflow of $35.7b in the June quarter 2019, an increase of $13.9b on the net outflow of $21.9b in the March quarter 2019, where:
  • equity and investment fund shares recorded a net outflow of $14.8b in the June quarter 2019, a turnaround of $16.9b on the net inflow of $2.1b in the March quarter 2019
  • debt securities recorded a net outflow of $20.9b in the June quarter 2019, a decrease of $3.0b on the net outflow of $24.0b in the March quarter 2019.


Financial derivatives

Financial derivatives recorded a net outflow of $1.4b in the June quarter 2019, an increase of $0.7b on the net outflow of $0.7b in the March quarter 2019.


Other investment

Other investment recorded a net inflow of $6.3b in the June quarter 2019, a decrease of $16.9b on the net inflow of $23.2b in the March quarter 2019.


Reserve assets

Reserve assets recorded an inflow of $3.0b in the June quarter 2019, a turnaround of $4.8b on the outflow of $1.8b in the March quarter 2019.


International investment position (IIP)

Australia's net IIP liability position was $1,001.6b at 30 June 2019, an increase of $9.2b on the revised 31 March 2019 position of $992.3b. Australia's net foreign debt liability position increased $19.4b to $1,143.5b. Australia's net foreign equity asset position increased $10.2b to $141.9b at 30 June 2019.

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
Dec 2018
969 570
9 007
46 139
-3 303
-2 666
1 018 747
Mar 2019
1 018 747
3 630
-27 599
2 846
-5 290
992 335
Jun 2019
992 335
-3 929
5 383
10 253
-2 481
1 001 560
Net Foreign Equity
Dec 2018
-104 255
-10 783
36 917
-17 366
-4 824
-100 310
Mar 2019
-100 310
12 849
-40 741
3 075
-6 627
-131 754
Jun 2019
-131 754
6 667
-3 989
-8 440
-4 388
-141 904
Net Foreign Debt
Dec 2018
1 073 826
19 790
9 222
14 062
2 158
1 119 058
Mar 2019
1 119 058
-9 218
13 142
-229
1 336
1 124 089
Jun 2019
1 124 089
-10 596
9 372
18 692
1 907
1 143 464



Supplementary information

Conditions

The conditions in the global economy showed slower than expected growth in most of Australia’s major trading partner countries in the June quarter 2019. 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%), South Korea (1.1%), the USA (0.5%), Spain (0.5%), Japan (0.4%), the Euro 28 (0.2%), France (0.2%), Belgium (0.2%), Germany (-0.1%) and the UK (-0.2%).
  • Foreign asset transactions were -$1.8b in the June quarter 2019 compared to $15.5b in the March quarter 2019
  • Foreign liability transactions were -$2.2b in the June quarter 2019 compared to -$11.9b in the March quarter 2019.

The Australian share market, as measured by the MSCI global index (footnote 3), increased 7.7% in the June quarter 2019, compared to an increase of 8.4% in the March quarter 2019. Increases were recorded in New Zealand (5.3%), Switzerland (4.6%), Singapore (4.6%), the USA (3.8%), Germany (3.5%), France (3.2%), the UK (2.0%) and Canada (1.9%). Decreases were recorded in China (5.5%), Japan (1.8%) and Hong Kong (0.7%). A market price change of -$31.8b was recorded for foreign equity assets and $27.8b for foreign equity liabilities in the June quarter 2019.

According to Thomson Reuters (footnote 4), the composite corporate benchmark yields decreased in the USA from 3.68% to 3.24%, the UK from 2.33% to 2.15%, Germany from 0.90% to 0.64% and Japan from 0.35% to 0.31% over the June quarter 2019. The long-term 10 year government bond yields decreased in the USA from 2.41% to 2.00%, the UK from 1.00% to 0.83%, Germany from -0.07% to -0.32% and Japan from -0.09% to -0.16% over the June quarter 2019. A market price change of -$1.6b was recorded for portfolio investment debt securities assets and $10.3b in portfolio investment debt securities liabilities in the June quarter 2019.

The Australian dollar saw mixed movement against major currencies in the June quarter 2019. The Australian dollar depreciated 3.55% against the Canadian dollar, 3.39% against the Japanese yen, 3.03% against the Swiss franc, 2.14% against the European euro, 1.77% against the Indonesian rupiah, 1.57% against the Hong Kong dollar, 1.21% against the Singapore dollar, 1.21% against the Indian rupee and 1.18% against the US dollar. The Australian dollar appreciated 2.90% against the UK pound sterling, 1.10% against the Chinese renminbi, 0.62% against the South Korean won and 0.19% against the New Zealand dollar. The Trade Weighted Index (TWI)(footnote 5) fell 0.83% to 60.1 in the June quarter 2019. These movements were reflected in exchange rate changes for foreign assets of -$16.6b and foreign liabilities of $26.9b in the June quarter 2019.


Relationship between IPD, EPI and IPI (footnote 6)

In original terms, the IPD for total goods credits rose 2.7% and the chain Laspeyres price index for goods exports rose 3.9%. The Export Price Index (EPI)(footnote 7) rose 3.8% during the June quarter 2019.

In original terms, the IPD for total goods debits rose 0.8% and the chain Laspeyres price index for goods imports rose 0.9%. The Import Price Index (IPI)(footnote 7) rose 0.9% during the June quarter 2019.

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 - June quarter 2019

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
3.0
2.7
3.8
3.9
Services
0.4
0.2
na
0.3
Imports
Goods
0.9
0.8
0.9
0.9
Services
1.7
1.7
na
1.7

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



Commodity Price Indexes

The RBA Commodity Price Index (average monthly index) for rural commodities rose 1.6% between the March quarter 2019 and the June quarter 2019 while the EPI for rural goods rose 0.4%.

The RBA Commodity Price Index for non-rural commodities rose 3.4% between the March quarter 2019 and the June quarter 2019 while the EPI for non-rural goods (excluding non-monetary gold) rose 4.5%.

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 2018-19 situation

Current account

In original terms, the balance on current account for 2018-19 was a deficit of $12.0b, a fall of $39.3b on the deficit of $51.3b recorded for 2017-18. The balance on goods and services was a surplus of $50.2b, a rise of $42.6b on the surplus of $7.6b recorded for 2017-18. Goods and services credits rose $66.6b (17%) and goods and services debits rose $23.9b (6%).

The low value threshold adjustments applied to goods debits for 2018-19, fell $3.0b to $7.5b.

The 2018-19 net primary income deficit rose $3.1b, with a rise in primary income debits of $13.9b (12%) and a rise in primary income credits of $10.8b (18%).

The 2018-19 net secondary income deficit rose by $0.2b, with a rise in secondary income debits of $0.5b (5%) and a rise in secondary income credits of $0.3b (3%).

Financial account

The balance on financial account recorded a net inflow of $24.4b, with a net inflow on equity of $18.6b and a net inflow on debt of $5.8b. This result was a decrease of $33.8b on the net inflow of $58.2b recorded for the previous financial year as a result of:

  • an increase of $7.0b on the net inflow on direct investment
  • a turnaround of $95.8b from a net inflow of $14.0b to a net outflow of $81.9b on portfolio investment
  • an increase of $2.8b on the net outflow on financial derivatives
  • a turnaround of $57.3b from a net outflow of $15.2b to a net inflow of $42.1b on other investment
  • a decrease of $5.2b on the net inflow on reserve assets.

International investment position

Australia's net international investment position as at 30 June 2019 was a net foreign liability of $1,001.6b. This was an increase of $28.4b on the position a year earlier as a result of:
  • transactions of $24.4b
  • price changes of $13.4b
  • exchange rate changes of $5.6b
  • other changes of -$15.0b.

During 2018-19, Australia's net foreign equity asset increased to $141.9b, an increase of $61.7b on the previous financial year, with exchange rate changes of $39.1b, price changes of $16.7b and other changes of $24.5b, offset by net transactions of $18.6b.

Australia's net foreign debt liability increased to $1,143.5b, an increase of $90.0b on the previous financial year, with exchange rate changes of $44.7b, price changes of $30.1b, net transactions of $5.8b and other changes of $9.5b.

At 30 June 2019, the ratio of Australia's net international investment position to GDP using the latest available GDP figure (for the year ended 31 March 2019 using current prices) was 52.2%. This compares with 52.7% 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 21 August 2019. <back
3 MSCI Global Market Indexes 2019, Morgan Stanley Capital International, viewed 05 July 2019. <back
4 Thomson Reuters, viewed 08 July 2019. <back
5 Exchange Rates – Daily 2014 to Current, Reserve Bank of Australia - Statistical Tables, viewed 10 July 2019. <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