5302.0 - Balance of Payments and International Investment Position, Australia, Sep 2019 Quality Declaration 
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 03/12/2019   
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Analysis and comments

Balance of payments

In original current price terms, the September quarter 2019 current account surplus was $5,174m, a fall of $879m on the June quarter 2019 surplus. In original current price terms, the balance on goods and services was a net surplus of $19,589m, primary income was a net deficit of $14,336m and secondary income was a net deficit of $79m.

In original current price terms, the September quarter 2019 capital and financial account was $7,893m, a rise of $4,393m on the June quarter 2019 deficit. In original current price terms, the capital account was a net deficit of $159m and the financial account was a net deficit of $7,734m.

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

CURRENT ACCOUNT
-12 330
-6 524
-842
6 053
5 174
Goods and services
5 264
8 285
16 161
19 066
19 589
Credits
111 949
118 141
116 849
123 231
128 312
Debits
-106 685
-109 856
-100 688
-104 165
-108 723
Goods
8 497
9 512
13 767
21 472
21 902
Credits
89 043
93 487
90 333
100 190
103 518
Debits
-80 546
-83 975
-76 566
-78 718
-81 616
Services
-3 233
-1 227
2 394
-2 406
-2 313
Credits
22 906
24 654
26 516
23 041
24 794
Debits
-26 139
-25 881
-24 122
-25 447
-27 107
Primary income
-17 417
-15 003
-16 355
-12 849
-14 336
Credits
16 535
17 827
18 062
17 512
16 990
Debits
-33 952
-32 830
-34 417
-30 361
-31 326
Secondary income
-177
194
-648
-164
-79
Credits
2 412
2 441
2 386
2 479
2 413
Debits
-2 589
-2 247
-3 034
-2 643
-2 492
CAPITAL AND FINANCIAL ACCOUNT
14 206
8 333
3 048
-3 500
-7 893
Capital account
-175
-162
-200
-233
-159
Acquisitions/disposals of non-produced non-financial assets
3
33
3
2
6
Credits
3
63
3
2
7
Debits
-
-30
-
-
-1
Capital transfers
-178
-195
-203
-235
-165
Credits
-
-
-
-
-
Debits
-178
-195
-203
-235
-165
Financial account
14 381
8 495
3 248
-3 267
-7 734
Direct investment
3 542
34 540
4 947
26 302
11 141
Assets
-12 798
22 134
-7 157
1 558
4 983
Liabilities
16 340
12 406
12 104
24 744
6 157
Portfolio investment
-15 064
-7 861
-22 485
-37 625
-3 413
Assets
-3 369
-24 235
-12 945
-25 357
-22 778
Liabilities
-11 695
16 373
-9 540
-12 268
19 365
Financial derivatives
-877
-5 553
-661
-1 273
2 057
Assets
29 693
10 375
18 162
16 828
26 625
Liabilities
-30 569
-15 928
-18 823
-18 101
-24 568
Other investment
25 464
-13 955
23 292
6 338
-21 056
Assets
27 471
-5 506
17 529
-4 982
-20 177
Liabilities
-2 007
-8 449
5 763
11 319
-879
Reserve assets
1 315
1 324
-1 846
2 992
3 538
NET ERRORS AND OMISSIONS
-1 875
-1 810
-2 206
-2 553
2 719

- 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 2019 current account surplus was $7,855m, a rise of $3,186m on the June quarter 2019 surplus.

In trend current price terms, the September quarter 2019 current account surplus was $8,384m, a rise of $4,403m on the June quarter 2019 surplus.

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 2019

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

Seasonally Adjusted

Balance on current account
7 855
3 186
68
Balance on goods and services
21 065
1 799
9
Net goods
21 416
1 354
7
Net services
-350
447
56
Net primary income
-13 033
1 596
11
Net secondary income
-177
-210
(a). .

Trend

Balance on current account
8 384
4 403
111
Balance on goods and services
22 145
3 512
19
Net goods
22 506
3 207
17
Net services
-361
305
46
Net primary income
-13 655
860
6
Net secondary income
-106
31
23

.. 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 September quarter 2019 remained steady at 109.4, with an increase of 1.4% in the implicit price deflator (IPD) for goods and services credits and an increase of 1.0% in the IPD for goods and services debits.

In trend terms, the terms of trade for net goods and services rose 1.2% to 110.3.


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 $9,285m, a rise of $962m on the June quarter 2019 surplus of $8,324m.

The net surplus on goods rose $185m on the June quarter 2019 surplus of $7,584m. Goods credits rose $323m and goods debits rose $138m. The net surplus on services rose $776m on the June quarter 2019 surplus of $740m.

The rise in the balance on goods and services surplus, in seasonally adjusted chain volume terms, is expected to contribute 0.2 percentage points to growth in the September quarter 2019 chain volume measure of GDP, assuming no significant revision to the GDP chain volume estimate for the June quarter 2019.


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 2019 was a surplus of $22,506m, a rise of $3,207m on the June quarter 2019 surplus of $19,299m.

In seasonally adjusted terms at current prices, net goods was a surplus of $21,416m, a rise of $1,354m on the June quarter 2019 surplus of $20,062m.

GOODS, Price and volume analysis: Seasonally adjusted - September Quarter 2019

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

Exports
2 113
2.1
0.4
1.7
Rural goods
-364
-3.1
-2.8
-0.3
Non-rural goods
-73
-0.1
-1.1
1.1
Net exports of goods under merchanting
-9
-16.7
-17.8
1.4
Non-monetary gold
2 560
51.2
30.8
15.6
Imports
760
1.0
0.2
0.8
Consumption goods
231
0.9
-0.5
1.4
Capital goods
-839
-4.3
-5.6
1.4
Intermediate and other merchandise goods
252
0.8
2.1
-1.3
Non-monetary gold
1 116
74.5
51.7
15.0

(a) Reference year 2017-18.
(b) Movements in indexes are based on data to four decimal places.


Goods credits

The trend estimate of goods credits at current prices rose $2,976m (3%) to $102,128m in the September quarter 2019.

In seasonally adjusted terms at current prices, goods credits rose $2,113m (2%) to $101,807m, with prices up 2%.


Rural goods

Exports of rural goods, in seasonally adjusted terms at current prices, fell $364m (3%) to $11,356m, with volumes down 3%.

The main components contributing to the fall were:
  • other rural, down $241m (4%), with volumes down 3% and prices down 2%
  • wool and sheepskins, down $235m (25%), with volumes down 16% and prices down 10%
  • cereal grains and cereal preparations, down $82m (6%), with volumes down 2% and prices down 4%.

Partly offsetting these falls was meat and meat preparations, up $193m (5%), with prices up 5%.


Non-rural goods

Exports of non-rural goods, in seasonally adjusted terms at current prices, fell $73m to $82,843m, with volumes down 1% and prices up 1%.

The main components contributing to the fall were:
  • coal, coke and briquettes, down $1,769m (10%), with volumes down 4% and prices down 6%
  • metals (excl. non-monetary gold), down $509m (14%), with volumes down 16% and prices up 2%.

Partly offsetting these falls were:
  • metal ores and minerals, up $1,377m (4%), with volumes up 2% and prices up 2%
  • other mineral fuels, up $1,011m (7%), with volumes up 3% and prices up 4%.


Selected major commodities, Current prices (a)
Graph: This graph shows the levels of the Metal ores and minerals, Coal, coke and briquettes and Other mineral fuels series


Net exports of goods under merchanting

Net exports of goods under merchanting, in seasonally adjusted terms at current prices, fell $9m (17%) to $45m, with volumes down 18% and prices up 1%.


Non-monetary gold

Exports of non-monetary gold, in original and seasonally adjusted terms at current prices, rose $2,560m (51%) to $7,563m, with volumes up 31% and prices up 16%.


Goods debits

The trend estimate of goods debits at current prices fell $231m to $79,622m in the September quarter 2019.

In seasonally adjusted terms at current prices, goods debits rose $760m (1%) to $80,391m, with prices up 1%.


Consumption goods

Imports of consumption goods, in seasonally adjusted terms at current prices, rose $231m (1%) to $26,233m, with volumes down 1% and prices up 1%.

The main components contributing to the rise were:
  • non-industrial transport equipment, up $300m (5%), with volumes up 6%
  • textiles, clothing and footwear, up $93m (2%), with prices up 2%.

Partly offsetting these rises was consumption goods n.e.s., down $182m (2%), with volumes down 5% and prices up 3%.


Capital goods

Imports of capital goods, in seasonally adjusted terms at current prices, fell $839m (4%) to $18,845m, with volumes down 6% and prices up 1%.

The main components contributing to the fall were:
  • civil aircraft and confidentialised items, down $543m (38%), with volumes down 39% and prices up 3%
  • industrial transport equipment n.e.s., down $418m (13%), with volumes down 14% and prices up 2%
  • machinery and industrial equipment, down $260m (4%), with volumes down 5% and prices up 1%
  • ADP equipment, down $158m (6%), with volumes down 6%.

Partly offsetting these falls were:
  • telecommunications equipment, up $407m (12%), with volumes up 11% and prices up 2%
  • capital goods n.e.s., up $134m (5%), with volumes up 1% and prices up 4%.


Intermediate and other merchandise goods

Imports of intermediate and other merchandise goods, in seasonally adjusted terms at current prices, rose $252m (1%) to $32,700m, with volumes up 2% and prices down 1%.

The main components contributing to the rise were:
  • processed industrial supplies n.e.s., up $191m (2%), with volumes up 2% and prices up 1%
  • primary industrial supplies n.e.s., up $160m (43%), with volumes up 53% and prices down 6%.

Partly offsetting these rises was other parts for capital goods, down $99m (2%), with volumes down 4% and prices up 2%.


Non-monetary gold

Imports of non-monetary gold, in original and seasonally adjusted terms at current prices, rose $1,116m (74%) to $2,614m, with volumes up 52% and prices up 15%.


Services

The trend estimate of net services at current prices was a deficit of $361m, a fall of $305m on the June quarter 2019 deficit of $666m.

In seasonally adjusted terms at current prices, net services was a deficit of $350m, a fall of $447m on the June quarter 2019 deficit of $797m.

SERVICES, Price and volume analysis: Seasonally adjusted - September Quarter 2019

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

Exports
494
2.0
1.6
0.4
Manufacturing services on physical inputs owned by others
-
-
-
-
Maintenance and repair services n.i.e.
1
9.1
8.7
0.4
Transport
19
1.0
-0.5
1.4
Travel
457
2.8
2.6
0.2
Other services
17
0.2
-0.1
0.3
Imports
47
0.2
-1.6
1.8
Manufacturing services on physical inputs owned by others
-
-
-
-
Maintenance and repair services n.i.e.
18
6.3
4.5
1.7
Transport
-104
-2.2
-5.1
3.0
Travel
85
0.7
-0.8
1.5
Other services
48
0.6
-1.0
1.6

- nil or rounded to zero (including null cells)
(a) Reference year 2017-18.
(b) Movements in indexes are based on data to four decimal places.


Services credits

Services credits, in seasonally adjusted terms at current prices, rose $494m (2%) to $25,566m, with volumes up 2%.

The main component contributing to the rise was travel, up $457m (3%), with volumes up 3%.

In seasonally adjusted terms, tourism related services credits rose $474m (3%) to $17,445m.


Services debits

Services debits, in seasonally adjusted terms at current prices, rose $47m to $25,916m, with volumes down 2% and prices up 2%.

The main components contributing to the rise were:
  • travel, up $85m (1%), with volumes down 1% and prices up 1%
  • other services, up $48m (1%), with volumes down 1% and prices up 2%.

Partly offsetting these rises was transport, down $104m (2%), with volumes down 5% and prices up 3%.

In seasonally adjusted terms, tourism related services debits rose $80m (1%) to $15,007m.


Primary income

The trend estimate of the net primary income deficit at current prices fell $860m (6%) to $13,655m in the September quarter 2019.

In seasonally adjusted terms at current prices, the net primary income deficit fell $1,596m (11%) to $13,033m in the September quarter 2019.



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 $5m to $17,395m. Compensation of employees rose $51m (9%) partially offset by investment income, which fell $47m. The main component of investment income contributing to the fall was portfolio investment assets, interest, down $612m (29%) this was partially offset by direct investment assets, income on equity and investment fund shares, up $477m (9%).

Primary income debits

Primary income debits, in seasonally adjusted terms at current prices, fell $1,592m (5%) to $30,427m. The main components of investment income contributing to the fall were portfolio investment liabilities, interest, down $1,056m (18%), portfolio investment liabilities, income on equity and investment fund shares, down $250m (4%) and direct investment liabilities, income on equity and investment fund shares, down $179m (1%).


Secondary income

The trend estimate of the net secondary income deficit at current prices fell $31m to $106m in the September quarter 2019.

In seasonally adjusted terms at current prices, the net secondary income deficit was a turnaround of $210m on the June quarter 2019 surplus of $33m.


Capital account

In original terms, the capital account deficit was $159m, a decrease of $74m on the June quarter 2019 deficit of $233m. Capital account credits increased $5m and capital account debits decreased $69m (29%) in the September quarter 2019.


Financial account

The balance on the financial account, in original terms, recorded a net outflow of $7.7b, which was driven by a net outflow of debt of $5.5b and a net outflow of equity of $2.3b.

The financial account deficit increased $4.5b from $3.3b in the June quarter 2019, to $7.7b in the September quarter 2019.


Direct investment

Direct investment recorded a net inflow of $11.1b in the September quarter 2019, a decrease of $15.2b on the net inflow of $26.3b in the June quarter 2019, where:

  • direct investment liabilities recorded an inflow of $6.2b, a decrease of $18.6b on the inflow of $24.7b in the June quarter 2019
  • direct investment assets recorded an inflow of $5.0b, an increase of $3.4b on the inflow of $1.6b in the June quarter 2019.


Portfolio investment

Portfolio investment recorded a net outflow of $3.4b in the September quarter 2019, a decrease of $34.2b on the net outflow of $37.6b in the June quarter 2019, where:
  • equity and investment fund shares recorded a net outflow of $12.6b in the September quarter 2019, a decrease of $5.7b on the net outflow of $18.3b in the June quarter 2019
  • debt securities recorded a net inflow of $9.2b in the September quarter 2019, a turnaround of $28.5b on the net outflow of $19.3b in the June quarter 2019.


Financial derivatives

Financial derivatives recorded a net inflow of $2.1b in the September quarter 2019, a turnaround of $3.3b on the net outflow of $1.3b in the June quarter 2019.


Other investment

Other investment recorded a net outflow of $21.1b in the September quarter 2019, a turnaround of $27.4b on the net inflow of $6.3b in the June quarter 2019. This was driven by net outflows of $13.0b in loans and net outflows of $3.4b in currency and deposits.


Reserve assets

Reserve assets recorded an inflow of $3.5b in the September quarter 2019, an increase of $0.5b on the inflow of $3.0b in the June quarter 2019.


International investment position (IIP)

Australia's net IIP liability position was $976.0b at 30 September 2019, a decrease of $22.0b on the revised 30 June 2019 position of $998.0b. Australia's net foreign debt liability position increased $20.4b to $1,163.3b and net foreign equity asset position increased $42.4b to $187.4b at 30 September 2019.
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 2019
1 018 338
3 248
-26 884
3 186
-5 439
992 449
Jun 2019
992 449
-3 267
4 610
6 348
-2 175
997 966
Sep 2019
997 966
-7 734
1 860
-4 838
-11 264
975 989
Net Foreign Equity
Mar 2019
-98 861
11 352
-39 748
3 012
-6 936
-131 179
Jun 2019
-131 179
5 771
-4 851
-10 357
-4 322
-144 938
Sep 2019
-144 938
-2 262
-6 131
-19 502
-14 522
-187 354
Net Foreign Debt
Mar 2019
1 117 199
-8 104
12 864
173
1 496
1 123 629
Jun 2019
1 123 629
-9 038
9 460
16 706
2 147
1 142 904
Sep 2019
1 142 904
-5 472
7 991
14 664
3 257
1 163 343




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 September 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 (1.5%), Indonesia (1.2%), the USA (0.5%), South Korea (0.4%), Spain (0.4%), Belgium (0.4%), Netherlands (0.4%), Euro 28 (0.3%), France (0.3%), the UK (0.3%), Germany (0.1%) and Japan (0.1%).
    • Foreign asset transactions recorded an outflow of -$7.8b in the September quarter 2019 compared to an outflow of -$9.0b in the June quarter 2019
    • Foreign liability transactions were $0.1b in the September quarter 2019 compared to $5.7b in the June quarter 2019.

The Australian share market, as measured by the MSCI global index (footnote 3), increased 1.2% in the September quarter 2019, compared to an increase of 7.7% in the June quarter 2019. Increases were recorded in New Zealand (3.0%), Japan (2.6%), France (2.5%), Switzerland (2.5%), Canada (1.2%), the USA (1.1%) and Germany (0.2%). Decreases were recorded in Hong Kong (12.4%), Singapore (5.2%), China (5.0%) and the UK (0.6%). A market price change of -$8.2b was recorded for foreign equity assets and $2.1b for foreign equity liabilities in the September quarter 2019.

According to Thomson Reuters (footnote 4), the composite corporate benchmark yields decreased in the USA from 3.24% to 3.01%, the UK from 2.15% to 1.83%, Germany from 0.64% to 0.50%, and Japan from 0.31% to 0.30% over the September quarter 2019. The long-term 10 year government bond yields decreased in the USA from 2.00% to 1.68%, the UK from 0.83% to 0.49%, Japan from -0.16% to -0.22% and Germany from -0.32% to -0.57% over the September quarter 2019. A market price change of -$0.4b was recorded for portfolio investment debt securities assets and $9.6b in portfolio investment debt securities liabilities in the September quarter 2019.

The Australian dollar depreciated against almost all major and minor trading currencies in the September quarter 2019. The Australian dollar depreciated 3.76% against the US Dollar, 3.71% against the Japanese yen, 3.47% against the Indonesian rupiah, 3.37% against the Hong Kong dollar, 2.75% against the Canadian dollar, 2.24% against the Swiss franc, 1.76% against the Singapore dollar, 1.36% against the Indian rupee, 0.85% against the UK pound sterling, 0.22% against the South Korean won and 0.20% against the Chinese renminbi. The Australian dollar appreciated 3.34% against the South African rand and 3.05% against the New Zealand dollar, while it was unchanged against the European euro. The Trade Weighted Index (TWI)(footnote 5) fell 1.50% to 59.200 in the September quarter 2019. These movements were reflected in exchange rate changes for foreign assets $34.7b and foreign liabilities of $29.8b in the September quarter 2019.



Relationship between IPD, EPI and IPI (footnote 6)

In original terms, the IPD for total goods credits rose 1.6% and the chain Laspeyres price index for goods exports rose 1.6%. The Export Price Index (EPI)(footnote 7) rose 1.3% during the September quarter 2019.

In original terms, the IPD for total goods debits rose 0.6% and the chain Laspeyres price index for goods imports rose 0.8%. The Import Price Index (IPI)(footnote 7) rose 0.4% during the September 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 - September 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
1.7
1.6
1.3
1.6
Services
0.4
0.4
na
0.4
Imports
Goods
0.8
0.6
0.4
0.8
Services
1.8
1.8
na
1.8

na not available
(a) Reference year 2017-18 = 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 fell 2.6% between the June quarter 2019 and the September quarter 2019 while the EPI for rural goods fell 0.7%.

The RBA Commodity Price Index for non-rural commodities fell 1.1% between the June quarter 2019 and the September quarter 2019 while the EPI for non-rural goods (excluding non-monetary gold) rose 0.6%.

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 Account, Organisation for Economic Cooperation and Development – Economic Department, viewed 20 November 2019. <back
3 MSCI Global Market Indexes 2019, Morgan Stanley Capital International, viewed 10 October 2019. <back
4 Thomson Reuters, viewed 08 October 2019. <back
5 Exchange Rates – Daily 2014 to Current, Reserve Bank of Australia - Statistical Tables, viewed 08 October 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