Balance of Payments and International Investment Position, Australia

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Balance of payments statistics on current, capital and financial transactions and the international investment position statement

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Reference period
December 2020
Released
2/03/2021
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Key statistics

  • The current account surplus, seasonally adjusted, rose $3,817m to $14,523m.
  • The capital and financial account deficit rose $4,270m to $9,999m.
  • Australia’s net IIP liability position was $947.2b at 31 December 2020.

Main features

Key figures (a)
Sep Qtr 2020 ($m)Dec Qtr 2020 ($m)
Balance on current account (b)10,70614,523
Balance on goods and services (b)13,69418,124
Net primary income (b)-2,723-3,167
Capital and financial account-5,729-9,999
International investment position (c)949,660947,218

- nil or rounded to zero (including null cells)
(a) Trend series is not published from June Quarter 2019
(b) Seasonally adjusted
(c) Levels at end of period

(a) Seasonally adjusted estimates at current prices.

COVID-19 in this publication

Suspension of trend estimates

The trend series attempts to measure underlying behaviour of international trade activity. In the short term, this measurement will be significantly affected by the current COVID-19 pandemic and subsequent changes to regular patterns in international trade that will occur during this time. If the trend estimates in this publication were to be calculated without fully accounting for this unusual event, they would provide a misleading view of underlying international trade activity.

It may be some time before the underlying trend in international trade activity can be accurately estimated. The trend series has therefore been suspended from June quarter 2019 and will be reinstated when more certainty emerges in the underlying trend in international trade.

Seasonal adjustment and COVID-19

International Accounts uses the concurrent seasonal adjustment method, meaning that seasonal factors are re-estimated each time new data becomes available. If not appropriately accounted for, unusual events, such as COVID-19, can distort estimates calculated using this method. From March quarter 2020, seasonal factors for series that have been notably impacted by COVID-19 will be calculated using data up to and including December quarter 2019, then projected from March quarter 2020 onwards. This approach, known as the forward factor method, ensures that the seasonal factors are not distorted by COVID-19 impacts.

The ABS has advised users that it had moved to using forward factors for seasonal analysis of a number of series, including Travel Services. Current ABS (and international practice) requires at least three years of data to assess whether a change in the seasonal pattern has occurred. Should COVID-19 result in a long-term change to the seasonal pattern then revisions to these series may occur in the future. The ABS will consult with users on any future methods changes to seasonal adjustment and potential revisions.

For more information on interpreting seasonally adjusted estimates of International travel services please see the May 2020 feature article International Travel Services time series which outlines the matter in greater detail.

Current Account

Balance on current account in current prices, seasonally adjusted (a) - December quarter 2020
Current prices ($m)Current prices change ($m)
Balance on current account14,5233,817
Balance on goods and services18,1244,430
Net goods14,2534,595
Net services3,872-164
Net primary income-3,167-444
Net secondary income-434-169

(a) For sign conventions, see the Concepts section in the Explanatory notes in the Methodology.

Terms of trade

Australia's seasonally adjusted terms of trade on net goods and services for the December quarter 2020 rose 4.7% to 106.7, with an increase of 3.9% in the implicit price deflator (IPD) for goods and services credits and a decrease of 0.8% in the IPD for goods and services debits.

(a) Seasonally adjusted, reference year 2018-19 = 100.

Relationship between IPD, EPI and IPI

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.

Price comparison (QoQ % change)
Implicit price deflators (a)Implicit price deflators (a)Chain Laspeyres Indexes (b)International Trade Price Indexes (b)
Seasonally AdjustedOriginalOriginalOriginal
Goods exports4.54.55.45.5
Services exports0.40.40.4na
Goods imports-1-0.6-0.6-1
Services imports11.1-0.7na

na not available
(a) Reference year 2018-19 = 100.
(b) Source: International Trade Price Indexes, Australia (cat. no. 6457.0).

(a) Reference year 2018-19 = 100
(b) Source: International Trade Price Indexes, Australia (cat. no. 6457.0).

Balance on goods and services

In seasonally adjusted chain volume terms, the balance on goods and services was a surplus of $11,837m, a fall of $458m on the September quarter 2020 surplus of $12,295m.

The fall in the balance on goods and services surplus, in seasonally adjusted chain volume terms, is expected to detract 0.1 percentage points from the change in the December quarter 2020 chain volume measure of GDP, assuming no significant revision to the GDP chain volume estimate for the September quarter 2020.

(a) Seasonally adjusted, reference year 2018-19.

Exports of goods (credits)

In seasonally adjusted terms at current prices, goods credits rose $7,688m (9%) to $93,005m, with volumes up 4% and prices up 5%.

Goods credits, price and volume change - seasonally adjusted - December quarter 2020
Current prices ($m)Current prices (%)Chain volume measures (a) (%)Implicit price deflators (a)(b)(%)
Exports of goods7,68894.34.5
Rural goods2,03122.123.5-1.2
Non-rural goods5,3067.71.56.1
Net exports of goods under merchanting5140.227.69.8
Non-monetary gold3004.18.5-4

(a) Reference year 2018-19 = 100
(b) Movements in indexes are based on data to four decimal places

Rural goods

Rural goods (seasonally adjusted)
Change in:
Sep-20Dec-20Current pricesCurrent prices
$m$m$m%
Rural goods9,20911,2402,03122
Meat and meat preparations3,2743,3881143
Cereal grains and cereal preparations1,1312,4351,304115
Wool and sheepskins5355885310
Other rural(a)4,2694,82956013

(a) For all time periods, estimates for sugar, sugar preparations and honey are included in Other non-rural.

Non-rural goods

Non-rural goods (seasonally adjusted)
Change in:
Sep-20Dec-20Current pricesCurrent prices
$m$m$m%
Non-rural goods68,61973,9255,3068
Metal ores and minerals(a)36,66840,3753,70710
Coal, coke and briquettes(a)9,2969,339430
Other mineral fuels(a)(b)8,2029,06786511
Metals (excl. non-monetary gold)2,6332,704713
Machinery2,5102,6851757
Transport equipment8751,00012514
Other manufactures5,1845,3581743
Other non-rural (incl. sugar and beverages)(c)2,8823,0431616
Goods procured in ports by carriers(b)369356-13-4

(a) From September quarter 2019 onwards, separate seasonally adjusted factors for current price and chain volume measures are applied.
(b) In using these seasonally adjusted series, care should be exercised because of the difficulties associated with reliably estimating the seasonal pattern.
(c) For all time periods, estimates for sugar, sugar preparations and honey are included in Other non-rural.

(a) Seasonally adjusted

(b) Between September quarter 2005 and September quarter 2019, seasonal factors were derived based on the corresponding chained volume measure.

(c) From September quarter 2019 onwards, separate seasonally adjusted factors for current price and chain volume measures are applied.

Imports of goods (debits)

In seasonally adjusted terms at current prices, goods debits rose $3,095m (4%) to $78,753m, with volumes up 5% and prices down 1%.

Goods debits, price and volume change - seasonally adjusted - December quarter 2020
Current prices ($m)Current prices (%)Chain volume measures (a) (%)Implicit price deflators (a)(b)(%)
Imports of goods3,0954.15.2-1
Consumption goods2,5949.710.1-0.3
Capital goods1,6258.89.1-0.2
Intermediate and other merchandise goods3171.21.9-0.8
Non-monetary gold-1,443-47.7-45.7-3.8

(a) Reference year 2018-19 = 100
(b) Movements in indexes are based on data to four decimal places

Consumption goods

Consumption goods (seasonally adjusted)
Change in:
Sep-20Dec-20Current pricesCurrent prices
$m$m$m%
Consumption goods-26,660-29,2542,59410
Food and beverages, mainly for consumption-4,003-4,38838510
Household electrical items-2,007-1,788-219-11
Non-industrial transport equipment-4,833-6,4211,58833
Textiles, clothing and footwear-5,487-5,398-89-2
Toys, books and leisure goods-1,710-2,03232219
Consumption goods n.e.s.-8,620-9,2266067

Capital goods

Capital goods (seasonally adjusted)
Change in:
Sep-20Dec-20Current pricesCurrent prices
$m$m$m%
Capital goods-18,487-20,1121,6259
Machinery and industrial equipment-6,220-6,6294097
ADP equipment-3,028-2,865-163-5
Telecommunications equipment-3,216-3,53732110
Civil aircraft and confidentialised items(a)(b)-604-445-159-26
Industrial transport equipment n.e.s.-2,729-3,71298336
Capital goods n.e.s.(c)-2,689-2,9252369

(a) From July 2008, commodities subject to a 'no commodity details' or 'no value details' restriction are included in Civil aircraft and confidentialised items. For earlier periods, commodities subject to a 'no commodity details' or 'no value details' restriction are included in Other merchandise goods.

(b) This component is not seasonally adjusted.

(c) In using these seasonally adjusted series, care should be exercised because of the difficulties associated with reliably estimating the seasonal pattern.

Intermediate and other merchandise goods

Intermediate and other merchandise goods (seasonally adjusted) (a)
Change in:
Sep-20Dec-20Current pricesCurrent prices
$m$m$m%
Intermediate and other merchandise goods-27,488-27,8053171
Food and beverages, mainly for industry-582-523-59-10
Primary industrial supplies n.e.s.(b)-484-474-10-2
Fuels and lubricants(c)-5,235-5,003-232-4
Parts for transport equipment-3,242-3,3941525
Parts for ADP equipment-214-197-17-8
Other parts for capital goods-4,683-4,7961132
Organic and inorganic chemicals-819-832132
Paper and paperboard-524-569459
Textile yarn and fabrics-407-438318
Iron and steel-809-755-54-7
Plastics-994-1,10010611
Processed industrial supplies n.e.s.-9,249-9,6383894
Other merchandise goods(d)(e)-228-65-163-71
Goods procured in ports by carriers(c)-16-20425

(a) For sign conventions, see the Explanatory Notes

(b) In using these seasonally adjusted series, care should be exercised because of the difficulties associated with reliably estimating the seasonal pattern.

(c) Prior to September quarter 2019 this component is not seasonally adjusted

(d) From July 2008, commodities subject to a 'no commodity details' or 'no value details' restriction are included in Civil aircraft and confidentialised items. For earlier periods, commodities subject to a 'no commodity details' or 'no value details' restriction are included in Other merchandise goods.

(e) From July 1981, this component is not seasonally adjusted.

Services

Services exports, price and volume change - seasonally adjusted - December quarter 2020
Current prices ($m)Current prices (%)Chain volume measures (a) (%)Implicit price deflators (a)(b)(%)
Exports of services24721-
Manufacturing services on physical inputs owned by others1---
Maintenance and repair services n.i.e.----
Transport20211
Travel13521-
Other services9011-

- nil or rounded to zero (including null cells)
(a) Reference year 2018-19 = 100
(b) Movements in indexes are based on data to four decimal places

Services imports, price and volume change - seasonally adjusted - December quarter 2020
Current prices ($m)Current prices (%)Chain volume measures (a) (%)Implicit price deflators (a)(b)(%)
Imports of services411431
Manufacturing services on physical inputs owned by others----
Maintenance and repair services n.i.e.313233-1
Transport3311256
Travel362929-
Other services13-1-1

- nil or rounded to zero (including null cells)
(a) Reference year 2018-19 = 100
(b) Movements in indexes are based on data to four decimal places

Income

Primary Income Deficit widened by $444m to $3,167m in the December quarter 2020.

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Primary income credits

In seasonally adjusted terms at current prices income to residents (credits) fell $1,595m (9%) to $15,821m. The main components contributing to this fall were: 
·    direct investment assets, income on equity and investment fund shares, down $807m (13%); 
·    portfolio investment assets, investment income on equity and investment fund shares, down $474m (6%). 

Primary income debits

In seasonally adjusted terms at current prices income to non-residents (debits) fell $1,152m (6%) to $18,987m. The main components contributing to this fall were:
·    portfolio investment liabilities, income on equity and investment fund shares, down $1,629m (33%); 
·    portfolio investment liabilities, interest, down $323m (9%). 

Partly offset by direct investment liabilities, income on equity and investment fund shares, up $1,011m (12%). 

Secondary income

In seasonally adjusted terms at current prices, the net secondary income deficit rose $169m to $434m in the December quarter 2020. 

Capital and Financial Account

The capital and financial accounts recorded a deficit of $10b, mainly driven by the financial account deficit of $9.8b.
This quarter financial account deficit was due to a net outflow of equity of $34.4b and a net inflow of debt of $24.6b.

Capital and financial account
Mar-20Jun-20Sep-20Dec-20Qtr on Qtr
($m)($m)($m)($m)($m)
Capital account-534-218-165-179-14
Acquisitions/disposals of non-produced non-financial assets-3460011
Acquisitions/disposals of non-produced non-financial assets credits00011
Acquisitions/disposals of non-produced non-financial assets debits-3460000
Capital transfers-188-218-165-180-15
Capital transfers credits00000
Capital transfers debits-188-218-165-180-15
Financial account-5,983-21,192-5,564-9,820-4,256
Direct investment9,7426,137-5,6485,71611,364
Direct investment assets-4,514-662-9,939-2,5117,428
Direct investment liabilities14,2566,8004,2918,2263,935
Portfolio investment-21,792-9,72212,201-11,817-24,018
Portfolio investment assets23,92414,766-42,551-71,281-28,730
Portfolio investment liabilities-45,716-24,48754,75259,4644,712
Financial derivatives-4,364-765-4,985-10,710-5,725
Financial derivatives assets10,661101,16850,01826,773-23,245
Financial derivatives liabilities-15,025-101,933-55,004-37,48317,521
Other investment9,397-39,905-6,8906,20913,099
Other investment assets-68,74415,75415,36624,7089,342
Other investment liabilities78,141-55,659-22,256-18,4993,757
Reserve assets1,03323,063-2427811,023
Net errors and omissions-2,7432,285-2,498-2,751-253

International Investment Position

Australia's net IIP liability position was $947.2b at 31 December 2020, a decrease of $2.4b on the revised 30 September 2020 position of $949.7b.  Australia's net foreign debt liability position increased $2.7b to $1,165.3b.  Australia's net foreign equity asset position increased $5.2b to $218.1b at 31 December 2020. 

International investment position, by net foreign equity and net foreign debt
Position at beginning of periodTransactionsPrice changesExchange rate changesOther adjustmentsPosition at end of period
$m$m$m$m$m$m
Net International Investment PositionJun-20865,072-21,1926,16584,828-122934,752
Net International Investment PositionSep-20934,752-5,564-23,52044,473-480949,660
Net International Investment PositionDec-20949,660-9,820-34,57141,831118947,218
Net Foreign EquityJun-20-314,50829,500-16,336128,934-1,997-174,406
Net Foreign EquitySep-20-174,406-42,941-28,91432,493813-212,956
Net Foreign EquityDec-20-212,956-34,410-33,97563,883-670-218,129
Net Foreign DebtJun-201,179,580-50,69222,501-44,1061,8751,109,158
Net Foreign DebtSep-201,109,15837,3775,39411,980-1,2941,162,616
Net Foreign DebtDec-201,162,61624,590-595-22,0527891,165,347

Economic conditions

CountryOECD quarterly GDP growth rate (a)(%)MSCI quarterly percentage change (b) (%)AUD exchange rate quarterly percentage change (c) (%)
AUSna14
USA1138
UK1102
Europe0153
China3114
Japan3136
South Korea1271
Indonesia3242
Indiana207
New Zealandna4-1

(a) OECD qtrly economic growth data not available for Australia, India and New Zealand as at 25/02/2021. South Korea figure based on a provisional estimate. OECD data from https://stats.oecd.org/index.aspx?queryid=350
(b) MSCI data based on local currency except for Europe which is based on $USD. MSCI data from https://www.msci.com/ 
(c) Exchange rates data from RBA: https://www.rba.gov.au/statistics/historical-data.html#exchange-rates

Supplementary Information

Value adjustments

Goods credits data presented in this publication are based on information provided by exporters to the Department of Home Affairs (Home Affairs). At the time of initial reporting to Home Affairs, the final prices at which transactions take place are not known for some commodities. Final quantity and/or unit price information is updated progressively in international merchandise trade data as exporters revise the information provided to Home Affairs.

For commodities such as iron ore and coal, newly negotiated contract prices are not fully reflected in data first reported to Home Affairs. When additional information on quantity and/or unit price for these commodities is available, the ABS may adjust the data to reflect actual transaction values.

Iron ore adjustments are applied on an international merchandise trade basis at the Australian Harmonized Export Commodity Classification (AHECC) level. Coal, coke and briquettes are adjusted on a balance of payments basis in original current price terms. When actual final transaction prices become available estimates are replaced with these data.

In most instances, transfer of ownership occurs when goods cross the customs frontier. In certain circumstances the ownership of large value capital expenditure items can occur prior to the items crossing the customs frontier. The ABS may adjust the relevant balance of payments series to record the timing when transfer of ownership was effected.

Exports on an international merchandise trade basis

Iron ore (in original terms)

  • Adjustments have been applied to iron ore lump in the June quarter (+$10m), September quarter (-$30m) and December quarter (+$285m) 2020.
  • Adjustments have been applied to iron ore fines in the September quarter (+$15m) and December quarter (+$110m) 2020. 
  • When actual final transaction prices become available estimates are replaced with these data.

Goods credits on a balance of payments basis

Coal (in original terms)

  • adjustments have been applied to coal, coke and briquettes in the balance of payments series for the December quarter (-$290m). All previous adjustments have been removed.
     

Capital expenditure (in original terms)

  • the balance of payments goods debits component capital goods n.e.s. includes an estimate of expenditure on capital goods that have changed ownership but have not yet crossed the customs frontier.

Revisions

The following goods component has been revised since the release of the December 2020 issue of International Trade in Goods and Services, Australia.

  • capital goods n.e.s. component of goods debits, revised in the December quarter 2020.

Summary of revisions since the last issue of this publication

Table 28 summarises revisions, in original current price terms, since the last issue of this publication.

Incorporation of the latest survey and administrative data has resulted in revisions to the balance of payments series back to the September quarter 2016. In original current price terms, these revisions have:

  • decreased the current account surplus for September quarter 2019 by $43m
  • decreased the current account surplus for December quarter 2019 by $49m
  • increased the current account surplus for March quarter 2020 by $391m
  • increased the current account surplus for June quarter 2020 by $564m
  • increased the current account surplus for September quarter 2020 by $426m

 

The International Investment Position (IIP) has been revised back to the September quarter 2019. These revisions have increased Australia's net IIP liability $6,884m to a net liability position of $949,660m at 30 September 2020. The financial account deficit has been revised down $3,563m to $5,564m at 30 September 2020. 

Seasonally adjusted and trend series have been revised due to the incorporation of revised estimates and the incorporation of estimates for the latest quarter.

In seasonally adjusted terms, the revisions decreased the volume surplus on goods and services by $388m for the September quarter 2020.

Data in this issue aligns with the data in the December quarter 2020 issue of Australian National Accounts: National Income, Expenditure and Product (cat. no. 5206.0) to be released on 3 March 2021.

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Previous catalogue number

This release previously used catalogue number 5302.0.

Methodology

Balance of Payments and International Investment Position, Australia methodology, December 2020

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