ANALYSIS AND COMMENTS

INTERNATIONAL INVESTMENT POSITION

Australia’s net international investment position at 31 December 2011 was $854.7 billion, an increase of $79.6 billion on the previous year.


Level of foreign investment in Australia

The level of foreign investment in Australia increased by $59.3 billion to reach $2,030.0 billion at 31 December 2011. Portfolio investment accounted for $1,171.4 billion (58%), direct investment for $507.4 billion (25%), other investment for $256.8 billion (13%) and financial derivatives for $94.5 billion (5%). Of the portfolio investment liabilities, debt securities accounted for $858.0 billion (42%) and equity securities for $313.3 billion (15%).

The leading investor countries at 31 December 2011 were:

• United States of America ($555.9 billion or 27%)
• United Kingdom ($470.8 billion or 23%)
• Japan ($123.4 billion or 6%)
• Singapore ($48.7 billion or 2%)
• Netherlands ($43.7 billion or 2%)
• Switzerland ($42.3 billion or 2%).

In addition, the level of borrowing raised on international capital markets (e.g. Eurobonds) was $46.4 billion or 2%.

The following graph illustrates the percentage share, by leading countries, of the total level of foreign investment in Australia at 31 December 2011.




Level of Australian investment abroad

The level of Australian investment abroad reached $1,175.4 billion at 31 December 2011, a decrease of $20.3 billion on the previous year. Portfolio investment accounted for $447.4 billion (38%), direct investment for $338.9 billion (29%), other investment for $242.5 billion (21%), financial derivatives for $100.5 billion (9%) and reserve assets for $46.1 billion (4%).

The leading destination countries as at 31 December 2011 were:

• United States of America ($410.6 billion or 35%)
• United Kingdom ($192.9 billion or 16%)
• New Zealand ($74.3 billion or 6%)
• Canada ($43.5 billion or 4%)
• Germany ($36.3 billion or 3%)
• Japan ($34.6 billion or 3%).

The following graph illustrates the percentage share, by leading countries, of the total level of Australian investment abroad at 31 December 2011.



FINANCIAL ACCOUNT TRANSACTIONS

The balance on financial account for the year ended 31 December 2011 recorded a net inflow (surplus) of $31.3 billion. This result is down $7.2 billion on the net inflow of $38.5 billion recorded for the previous year.


Foreign investment in Australia – Transactions

Foreign investment in Australia recorded a net inflow of $86.7 billion for the year ended 31 December 2011, a decrease of $15.2 billion on the net inflow of $101.9 billion for the previous year.

The leading investor countries during 2011 were:

• United States of America ($36.9 billion or 43%)
• Japan ($10.2 billion or 12%)
• Canada ($7.9 billion or 9%).

Partly offsetting these, investment from the following countries decreased:

• Germany ($17.2 billion or 20%)
• United Kingdom ($17.0 billion or 20%)
• France ($10.5 billion or 12%).

The following graph illustrates the percentage share, by leading countries, of total financial transactions for foreign investment in Australian during the year ended 31 December 2011.



Australian investment abroad – Transactions

Australian investment abroad recorded a net outflow of $55.4 billion for the year ended 31 December 2011, a decrease of $8.0 billion on the net outflow of $63.4 billion for the previous year.

The leading destination countries during 2011 were:

• United States of America ($38.5 billion or 69%)
• Canada ($7.3 billion or 13%)
• Netherlands ($5.7 billion or 10%)
• China (excludes SARs and Taiwan) ($5.7 billion or 10%).

Partly offsetting these, investment in the following countries decreased:

• United Kingdom ($17.3 billion or 31%)
• Singapore ($5.7 billion or 10%).

The following graph illustrates the percentage share, by leading countries, of total financial transactions for Australian investment abroad during the year ended 31 December 2011.



INCOME

Income debits totalled $87.3 billion for the year ended 31 December 2011. This is down $0.9 billion on the income debits in the previous year. The main countries to which income accrued for the year ended 31 December 2011 were:

• United States of America ($19.8 billion or 23%)
• United Kingdom ($10.6 billion or 12%)
• Japan ($10.3 billion or 12%)
• Switzerland ($2.2 billion or 3%)
• Netherlands ($1.8 billion or 2%)
• Singapore ($1.6 billion or 2%).

Income credits totalled $39.3 billion for the year ended 31 December 2011. This is up $2.4 billion on the income credits in the previous year. The main countries from which income accrued for the year ended 31 December 2011 were:

• United States of America ($8.4 billion or 21%)
• United Kingdom ($4.5 billion or 11%)
• Canada ($3.8 billion or 10%)
• New Zealand ($2.7 billion or 7%)
• Singapore ($1.9 billion or 5%)
• Germany ($1.5 billion or 4%).