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ANALYSIS AND COMMENTS
In seasonally adjusted current price terms, the March quarter 2017 current account deficit was $3,108m, a fall of $403m (11%) on the December quarter 2016 deficit. In trend current price terms, the March quarter 2017 current account deficit was $1,259m, a fall of $4,566m (78%) on the December quarter 2016 deficit. The contributors to the current account balance, in seasonally adjusted and trend terms at current prices, are shown in the following table.
TERMS OF TRADE(footnote 1) Australia's seasonally adjusted terms of trade on net goods and services for the March quarter 2017 rose 6.6% to 109.7, with an increase of 7.0% in the implicit price deflator (IPD) for goods and services credits and an increase of 0.3% in the IPD for goods and services debits. In trend terms, the terms of trade for net goods and services rose 6.9% to 109.2. BALANCE ON GOODS AND SERVICES In seasonally adjusted chain volume terms, the balance on goods and services was a surplus of $543m, a fall of $2,966m (85%) on the December quarter 2016 surplus of $3,509m. The net surplus on goods fell $3,239m (86%) on the December quarter 2016 surplus of $3,781m. Goods credits fell $1,953m (3%) and goods debits rose $1,287m (2%). The net surplus on services was a turnaround of $273m on the December quarter 2016 deficit of $271m. The fall in the balance on goods and services surplus, in seasonally adjusted chain volume terms, is expected to detract 0.7 percentage points from growth in the March quarter 2017 volume measure of GDP, assuming no significant revision to the GDP chain volume estimate for the December quarter 2016. Goods The trend estimate of net goods at current prices for the March quarter 2017 was a surplus of $9,998m, an increase of $5,640m on the December quarter 2016 surplus of $4,358m. In seasonally adjusted terms at current prices, net goods was a surplus of $9,322m, an increase of $2,685m (40%) on the December quarter 2016 surplus of $6,637m.
GOODS CREDITS The trend estimate of goods credits at current prices rose $6,847m (9%) to $79,704m in the March quarter 2017. In seasonally adjusted terms at current prices, goods credits rose $4,388m (6%) to $79,532m, with volumes down 3% and prices up 9%. Rural Goods Exports of rural goods, in seasonally adjusted terms at current prices, rose $840m (7%) to $12,229m, with volumes up 8% and prices down 1%. The main components contributing to the rise were:
Non-rural Goods Exports of non-rural goods, in seasonally adjusted terms at current prices, rose $4,087m (7%) to $62,881m, with volumes down 4% and prices up 12%. The main components contributing to the rise were:
Net Exports of Goods Under Merchanting Net exports of goods under merchanting, in seasonally adjusted terms at current prices, fell $6m (5%), with volumes down 16% and prices up 14%. Non-monetary Gold Non-monetary gold, in original and seasonally adjusted terms at current prices, fell $533m (11%), with volumes down 10% and prices down 1%. GOODS DEBITS The trend estimate of goods debits at current prices rose $1,207m (2%) to $69,705m in the March quarter 2017. In seasonally adjusted terms at current prices, goods debits rose $1,701m (2%) to $70,209m, with volumes up 2% and prices up 1%. Consumption Goods Imports of consumption goods, in seasonally adjusted terms at current prices, rose $768m (3%) to $24,713m, with volumes up 3%. The main components contributing to the rise were:
Capital Goods Imports of capital goods, in seasonally adjusted terms at current prices, rose $93m (1%) to $16,938m, with volumes up 2% and prices down 2%. The main component contributing to the rise was capital goods n.e.s., up $186m (5%), with volumes up 7% and prices down 2%. Partly offsetting this rise was civil aircraft and confidentialised items, down $200m (25%), with volumes down 25% and prices up 1%. Intermediate and Other Merchandise Goods Imports of intermediate and other merchandise goods, in seasonally adjusted terms at current prices, rose $677m (3%) to $26,992m, with prices up 3%. The main components contributing to the rise were:
Partly offsetting these rises was processed industrial supplies n.e.s., down $216m (3%), with volumes down 4% and prices up 1%. Non-monetary Gold Imports of non-monetary gold, in original and seasonally adjusted terms at current prices, rose $163m (12%), with volumes up 13% and prices down 1%. SERVICES The trend estimate of net services at current prices was a deficit of $49m, a fall of $315m (87%) on the December quarter 2016 deficit of $364m. In seasonally adjusted terms at current prices, net services was a deficit of $81m, a fall of $443m (85%) on the December quarter 2016 deficit of $524m.
Services Credits Services credits, in seasonally adjusted terms at current prices, rose $464m (3%) to $18,640m, with volumes up 2%. The main components contributing to the rise were:
In seasonally adjusted terms, tourism related services credits rose $280m (2%) to $12,208m. Services Debits Services debits, in seasonally adjusted terms at current prices, rose $21m to $18,721m, with volumes up 1% and prices down 1%. The main component contributing to the rise was travel, up $150m (2%), with volumes up 2%. Partly offsetting this rise was transport, down $100m (2%), with volumes down 1% and prices down 1%. In seasonally adjusted terms, tourism related services debits rose $196m (2%) to $10,245m. PRIMARY INCOME The trend estimate of the net primary income deficit at current prices rose $1,384m (15%) to $10,803m in the March quarter 2017. In seasonally adjusted terms at current prices, the net primary income deficit rose $2,712m (29%) to $11,940m in the March quarter 2017. Primary Income Credits Primary income credits, in seasonally adjusted terms at current prices, fell $2,153m (13%) to $14,484m. The main component contributing to the fall was direct investment assets, income on equity and investment fund shares, down $2,011m (26%). Primary Income Debits Primary income debits, in seasonally adjusted terms at current prices, rose $559m (2%) to $26,424m. The main component contributing to the rise was direct investment liabilities, investment income on equity and investment fund shares, up $474m (5%). SECONDARY INCOME The trend estimate of the net secondary income deficit at current prices rose $5m (1%) to $405m in the March quarter 2017. In seasonally adjusted terms at current prices, the net secondary income deficit rose $14m (4%) to $410m in the March quarter 2017. CAPITAL ACCOUNT In original terms, the capital account deficit was $132m, a decrease of $236m (64%) on the December quarter 2016 deficit of $368m. Capital account credits increased $6m (75%) and capital account debits decreased $230m (61%) in the March quarter 2017. FINANCIAL ACCOUNT The balance on the financial account, in original terms, recorded a net inflow of $3.8b, which was driven by a net inflow of equity of $15.0b and a net outflow of debt of $11.2b. The financial account surplus decreased $2.2b (36%) from $6.0b to $3.8b in the March quarter 2017. Direct Investment Direct investment recorded a net inflow of $14.1b in the March quarter 2017, a decrease of $7.1b on the net inflow of $21.2b in the December quarter 2016, where:
Portfolio Investment Portfolio investment recorded a net outflow of $3.3b in the March quarter 2017, a turnaround of $19.2b on the net inflow of $15.9b in the December quarter 2016, where:
Financial Derivatives Financial derivatives recorded a net outflow of $1.0b in the March quarter 2017, an increase of $0.8b on the net outflow of $0.2b in the December quarter 2016. Other Investment Other investment recorded a net outflow of $2.4b in the March quarter 2017, a decrease of $17.1b on the net outflow of $19.5b in the December quarter 2016. This was driven by net outflows of $10.3b in currency and deposits offset by inflows of $8.8b in loans. Reserve Assets Reserve assets recorded an outflow of $3.6b in the March quarter 2017, a decrease of $7.7b on the outflow of $11.3b in the December quarter 2016. INTERNATIONAL INVESTMENT POSITION (IIP) Australia's net IIP liability position was $1,025.5b at 31 March 2017, a decrease of $2.7b on the revised 31 December 2016 position of $1,028.2b. Australia's net foreign debt liability decreased $13.6b (1%) to $1,015.0b. Australia's net foreign equity had a turnaround of $10.9b from a net asset position of $0.3b on 31 December 2016 to a net liability position of $10.6b at 31 March 2017. The changes contributing to this result are shown in the following table.
SUPPLEMENTARY INFORMATION CONDITIONS The conditions in the global economy showed modest growth in Australia’s major trading partner countries in the March quarter 2017. 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 (1.3%), Indonesia (1.2%), South Korea (0.9%), Euro 28 (0.5%), Japan (0.5%), UK (0.3%) and USA (0.2%).
The Australian share market, as measured by the MSCI global index(footnote 3) , increased 4.1% in March quarter 2017, following an increase of 5.4% in December quarter 2016. Increases were recorded in Hong Kong (13.0%), Singapore (9.5%), Germany (6.4%), the USA (5.7%), Switzerland (5.7%), France (5.6%), the UK (2.7%) and Canada (1.4%). Decreases were recorded in Japan (1.0%) and New Zealand (0.5%). A market price change of -$46.0b was recorded for foreign equity assets and $12.9b in foreign equity liabilities in the March quarter 2017. According to Bloomberg(footnote 4) , the composite corporate benchmark yields increased in Germany from 0.93% to 0.99% and Japan from 0.25% to 0.28%. The yields decreased in Australia from 3.54% to 3.30%, the UK from 2.35% to 2.20% and the USA from 3.42% to 3.37%. The long-term 10 year government bond yields increased in Germany from 0.11% to 0.33%, Japan from 0.05% to 0.07% and Australia from 2.79% to 2.81%. The yields decreased in the UK from 1.24% to 1.14% and the USA from 2.45% to 2.40% over the March quarter 2017. A market price change of $1.6b was recorded for portfolio debt securities assets and $0.2b in portfolio debt securities liabilities in the March quarter 2017. The Australian dollar appreciated against the majority of the major currencies in the March quarter 2017. The Australian dollar appreciated 5.84% against the Hong Kong dollar, 5.64% against the US dollar, 5.32% against the New Zealand dollar, 4.87% against the Chinese renminbi, 4.73% against the Indonesian rupiah, 4.56% against the Canadian dollar, 4.21% against the Malaysian ringgit, 4.21% against the European euro, 3.97% against the UK pound sterling, 3.66% against the Swiss franc, 2.11% against the Singapore dollar, 1.58% against the Thai baht, 1.42% against the Japanese yen and 0.77% against the Indian rupee. It depreciated 2.08% against the South Korean won and 0.51% against the New Taiwan dollar. The Trade Weighted Index (TWI)(footnote 4,footnote 5) rose by 3.60% to 66.20 in the March quarter 2017. These movements were reflected in exchange rate changes for foreign assets of $57.8b and foreign liabilities of -$37.1b in the March quarter 2017. RELATIONSHIP BETWEEN IPD, EPI AND IPI(footnote 6) In original terms, the IPD for total goods credits rose 8.0% and the chain Laspeyres price index for goods exports rose 9.6%. The Export Price Index (EPI)(footnote 7) rose 9.4% during the March quarter 2017. In original terms, the IPD for total goods debits rose 0.4% and the chain Laspeyres price index for goods imports rose 0.9%. The Import Price Index (IPI)(footnote 7) rose 1.2% during the March quarter 2017. 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.
Commodity Price Indexes The RBA Commodity Price Index (average monthly index) for rural commodities increased 5.9% between the December quarter 2016 and the March quarter 2017 while the EPI for rural goods decreased 0.1%. The RBA Commodity Price Index for non-rural commodities increased 10.8% while the EPI for non-rural goods total (excluding non-monetary gold) increased 12.1%. 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. 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 18 May 2017. <back 3 MSCI Global Market Indexes 2016, Morgan Stanley Capital International, viewed 5 April 2017. <back 4 Bloomberg, Bloomberg Professional Service, viewed 24 April 2017. <back 5 Exchange Rates – Daily 2014 to Current, Reserve Bank of Australia - Statistical Tables, viewed 4 April 2017. <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 Document Selection These documents will be presented in a new window.
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