5302.0 - Balance of Payments and International Investment Position, Australia, June 2011 
Quality Declaration
Quality Declaration ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 06/09/2011
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ANALYSIS AND COMMENTS
VOLUMES AND PRICES Goods and Services In seasonally adjusted chain volume terms, the balance on goods and services was a deficit of $10,224m, an increase of $1,643m (19%) on the March quarter 2011 deficit of $8,581m. The net deficit on goods increased $336m (11%) on the March quarter 2011 deficit of $3,066m. Goods credits increased $1,838m (3%) and goods debits increased $2,174m (3%). The net deficit on services increased $1,307m (24%) on the March quarter 2011 deficit of $5,515m. The increase in the balance on goods and services deficit, in seasonally adjusted chain volume terms, is expected to detract 0.5 percentage points from growth in the June quarter 2011 volume measure of GDP, assuming no significant revision to the GDP chain volume estimate for the March quarter 2011. Terms of Trade and Implicit Price Deflator Australia's seasonally adjusted terms of trade on net goods and services rose 5.4% to 122.6 with an increase of 5.4% in the implicit price deflator (IPD) for goods and services credits while the IPD for goods and services debits remained steady at 85.4. In trend terms, the terms of trade rose 3.4% to 121.7. The June quarter 2011 terms of trade, in both trend and seasonally adjusted terms, were the highest result on record. Goods The trend estimate of net goods at current prices was a surplus of $7,137m, a decrease of $34m on the March quarter 2011 surplus of $7,171m. In seasonally adjusted terms at current prices, net goods recorded a surplus of $8,083m, an increase of $3,461m (75%) on the March quarter 2011 surplus of $4,622m.
Services
GOODS CREDITS The trend estimate of goods credits at current prices rose $1,495m (2%) to $63,744m in the June quarter 2011. In seasonally adjusted terms at current prices, goods credits rose $5,645m (9%) to $65,084m, with volumes up 3% and prices up 6%. Rural Goods Exports of rural goods, in seasonally adjusted terms at current prices, rose $884m (12%) to $8,461m, with volumes up 9% and prices up 2%. The main components contributing to the increase were:
Non-rural Goods Exports of non-rural goods, in seasonally adjusted terms at current prices, rose $5,023m (10%) to $53,089m, with volumes up 3% and prices up 7%. The main components contributing to the increase were:
Net Exports of Goods Under Merchanting Net exports of goods under merchanting, in seasonally adjusted terms at current prices, rose $36m (54%) to $103m, with volumes up 52% and prices up 1%. Non-monetary Gold Exports of non-monetary gold, in seasonally adjusted terms at current prices, fell $298m (8%) to $3,431m, with volumes down 10% and prices up 2%. GOODS DEBITS The trend estimate of goods debits at current prices rose $1,529m (3%) to $56,607m in the June quarter 2011. In seasonally adjusted terms at current prices, goods debits rose $2,185m (4%) to $57,002m, with volumes up 3% and prices up 1%. Consumption Goods Imports of consumption goods, in seasonally adjusted terms at current prices, fell $445m (3%) to $15,327m, with volumes down 1% and prices down 2%. The main component contributing to the decrease was non-industrial transport equipment, down $800m (19%), with volumes down 19%. This decrease follows the Japanese earthquake and tsunami in March 2011 which, in particular, impacted the imports of passenger motor vehicles. Partly offsetting this decrease were:
Capital Goods Imports of capital goods, in seasonally adjusted terms at current prices, rose $212m (2%) to $13,447m with volumes up 6% and prices down 4%. The main components contributing to the increase were:
Partly offsetting these increases were:
Intermediate and Other Merchandise Goods Imports of intermediate and other merchandise goods, in seasonally adjusted terms at current prices, rose $2,315m (9%) to $27,078m, with volumes up 5% and prices up 4%. The main components contributing to the increase were:
Non-monetary Gold Imports of non-monetary gold, in seasonally adjusted terms at current prices, rose $101m (10%) to $1,149m, with volumes up 6% and prices up 3%. SERVICES The trend estimate of net services at current prices was a deficit of $2,359m, an increase of $431m (22%) on the March quarter 2011 deficit of $1,928m. In seasonally adjusted terms at current prices, net services recorded a deficit of $2,483m, an increase of $608m (32%) on the March quarter deficit of $1,875m. Services Credits Services credits, in seasonally adjusted terms at current prices, rose $192m (2%) to $12,766m with prices up 1%. The main components contributing to the increase were:
In seasonally adjusted terms, tourism related service credits rose $140m (2%) to $8,544m. Services Debits Services debits, in seasonally adjusted terms at current prices, rose $800m (6%) to $15,249m,with volumes up 8% and prices down 2%. The main components contributing to the increase were:
In seasonally adjusted terms, tourism related service debits rose $564m (7%) to $8,579m. PRIMARY INCOME The trend estimate of the net primary income deficit at current prices decreased $385m (3%) in the June quarter 2011 to $13,107m. In seasonally adjusted terms, the net primary income deficit decreased $870m (7%) in the June quarter 2011 to $12,499m. Primary Income Credits Primary income credits, in seasonally adjusted terms at current prices, increased $557m (6%) to $10,468m. The main contributors to the increase were:
These increases were partly offset by:
Primary Income Debits Primary income debits, in seasonally adjusted terms at current prices, decreased $313m (1%) to $22,967m. The main contributors to the decrease were:
These decreases were partly offset by a $211m (2%) increase in direct investment liabilities, income on equity and investment fund shares. SECONDARY INCOME The trend estimate of net secondary income deficit at current prices, decreased $6m (1%) in the June quarter 2011 to $500m. In seasonally adjusted terms, the net secondary income deficit at current prices, increased $26m (5%) in the June quarter 2011 to $519m. FINANCIAL ACCOUNT The balance on financial account, in original terms, recorded a net inflow of $5.1b, with a net inflow of $3.8b of equity and a net inflow of $1.3b of debt. The financial account surplus decreased $5.4b from $10.5b in March quarter 2011 to $5.1b in June quarter 2011. Direct investment recorded a net inflow of $18.3b in June quarter 2011, an increase of $14.5b from the net inflow of $3.8b in March quarter 2011, where:
Portfolio investment recorded a net outflow of $3.7b, an increase of $2.7b on the net outflow of $1.0b in the March quarter 2011. This was driven by:
Financial derivatives recorded a net outflow of $4.2b, a decrease of $2.4b from the net outflow of $6.5b in the March quarter 2011. The main contributor was deposit-taking corporations, except the central bank with a net outflow of $6.1b. Other investment recorded a net inflow of $1.0b, a decrease of $6.6b from the net inflow of $7.6b in the March quarter 2011. Reserve assets recorded a net outflow of $6.4b, a turnaround of $13.0b from the net inflow of $6.6b in the March quarter 2011. INTERNATIONAL INVESTMENT POSITION ANALYSIS Australia's net international investment position at 30 June 2011 was a net foreign liability of $781.1b, down $1.2b on the 31 March 2011 position of $782.3b. The changes contributing to this result are shown in the following table.
SUPPLEMENTARY INFORMATION CONDITIONS The conditions in the global economy showed moderate increases for most countries in the June quarter 2011. According to the Organisation for Economic Cooperation and Development (OECD), preliminary real GDP estimates in seasonally adjusted terms showed positive quarterly growth for: Korea (0.8%), USA (0.3%), total EU (0.2%), UK (0.2%) and Germany (0.1%). Australia's international investment activities increased substantially during the quarter:
The Australian share market, as measured by the MSCI global index, decreased 4.7% in June quarter 2011, a turnaround of 7.0% on the 2.3% increase in March quarter 2011. There were decreases in most major markets: Canada (-6.1%), Switzerland (-3.2%), Japan (-2.5%), Singapore (-2.1%), USA (-0.3%). Market increases were seen in: New Zealand (2.4%), Germany (1.8%), Europe ex UK (0.8%) and UK (0.6%). A market price change of $18.2b was recorded for foreign equity assets and -$29.7b in foreign equity liabilities during June quarter 2011. According to Reuters, the composite corporate benchmark yield decreased in the UK (4.72% to 4.60%), US (4.19% to 4.00%), Germany (4.16% to 3.90%) and Japan (1.50% to 1.40%). Long term government bond yields decreased in all major markets over June quarter 2011. The 10 year government bond yields decreased from 3.69% to 3.38% in the UK, 3.47% to 3.18% in the US, 3.35% to 3.01% in Germany and 1.26% to 1.14% in Japan. In Australia, the rate decreased from 5.44% to 5.16%. This is reflected in the market price changes for both portfolio debt securities liabilities ($5.7b) and assets (-$3.9b) in the June quarter 2011. The Australian dollar appreciated against a number of the major currencies in the June quarter 2011. It appreciated against the US dollar (3.9%), Swedish krona (3.8%), UK pound sterling (3.8%), Canadian dollar (3.5%), Chinese renminbi (2.5%), European euro (1.3%) and Japanese yen (0.9%). The Australian dollar depreciated against the Swiss franc (-5.9%) and New Zealand dollar (-4.7%). The Trade Weighted Index (TWI) recorded an increase of 2.0%. The net impact of exchange rate changes was a decrease of $15.4b on foreign assets and $14.9b on foreign liabilities position. RELATIONSHIP BETWEEN IPD, EPI AND IPI(footnote 1) In original terms, the IPD for total goods credits rose 2.8% and the chain Laspeyres price index for goods exports rose 3.2%. The export price index (EPI) rose 6.0% during the June quarter 2011. In original terms, the IPD for total goods debits rose 0.1% and the chain Laspeyres price index for goods imports rose 0.7%. The import price index (IPI) rose 0.8% during the June quarter 2011. 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. In the June quarter 2011, the difference between the IPD and EPI was mainly due to the metals (excl. non-monetary gold) and metal ores and minerals components.
Commodity Price Indexes The RBA Commodity Price Index(footnote 2) (average monthly index) for rural commodities decreased 6.9% between the March 2011 and June 2011 quarters while the EPI for rural goods total increased 4.3%. The RBA Commodity Price Index for non-rural commodities increased 7.0% while the EPI for non-rural goods total (excluding non-monetary gold) increased 6.6%. 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. FINANCIAL YEAR 2010-11 SITUATION CURRENT ACCOUNT In original terms, the balance on current account for 2010-11 was a deficit of $33.6b, a 37% decrease on the deficit of $53.3b recorded for 2009-10. The balance on goods and services surplus was a record high at $20.8b, a turnaround of $24.8b on the deficit of $4.0b recorded in 2009-10. Goods credits increased $44.9b (22%) with volumes up 1%, and goods debits increased $14.3b (7%) with volumes up 9%. The 2010-11 services deficit of $6.9b was an increase of $5.8b on the deficit of $1.1b in 2009-10. The 2010-11 net primary income deficit increased $4.6b (10%), with an increase in primary income credits of $5.1b (14%) and an increase in primary income debits of $9.7b (11%). The 2010-11 secondary income deficit increased $0.5b (31%), with a decrease in secondary income credits of $0.4b (6%) and an increase in secondary income debits of $0.1b (1%). FINANCIAL ACCOUNT The balance on financial account recorded a net inflow of $33.5b, with a net inflow on debt of $36.6b and a net outflow on equity of $3.0b. This result was down $20.7b on the net inflow of $54.3b recorded for the previous year as a result of:
INTERNATIONAL INVESTMENT POSITION Australia's net international investment position as at 30 June 2011 was a net foreign liability of $781.1b. This was up $4.3b (1%) on the position a year earlier as a result of:
During 2010-11, Australia's net foreign equity liability increased to $106.1b, up $13.6b (15%) on the previous financial year, with exchange rate changes of $76.2b partially offset by price changes of -$52.3b, other changes of -$7.2b and net transactions of -$3.0b. Australia's net foreign debt liability fell to $675.0b, down $9.4b (1%) on the previous financial year, with exchange rate changes of -$49.1b partially offset by net transactions of $36.6b, other changes of $1.9b and price changes of $1.3b. At 30 June 2011, the ratio of Australia's net international investment position to GDP using the latest available GDP figure (for the year ended 31 March 2011 using current prices) was 57.2%. This compares with 60.5% one year ago and 51.2% one decade ago. 1 In this commentary movements in indexes are based on data to four decimal places. <back 2 For RBA Commodity Price Index methodology, see paragraph 23 of the Explanatory Notes. <back Document Selection These documents will be presented in a new window.
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