Balance of Payments and International Investment Position, Australia

• The current account surplus, seasonally adjusted, rose $3,186m to $7,855m in the September quarter 2019. The balance on goods and services surplus rose $1,799m to $21,065m. The primary income deficit fell $1,596m to $13,033m.
• In seasonally adjusted chain volume terms, the surplus on goods and services rose $962m from $8,324m in the June quarter 2019 to $9,285m in the September quarter 2019. This is expected to contribute 0.2 percentage points to growth in the September quarter 2019 volume measure of GDP.
   

• 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.
   

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.

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.

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.

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.

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.

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.

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.

The following goods component has been revised since the release of the September 2019 issue of International Trade in Goods and Services, Australia (cat. no. 5368.0).

• capital goods n.e.s. component of goods debits, revised in the September quarter 2019.
   

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 2015. In original current price terms, these revisions have:

• increased the 2015-16 current account deficit by $15m
• decreased the 2016-17 current account deficit by $20m
• decreased the 2017-18 current account deficit by $149m
• decreased the current account deficit for the September quarter 2018 by $432m
• decreased the current account deficit for the December quarter 2018 by $157m
• increased the current account deficit for the March quarter 2019 by $790m
• decreased the current account surplus for the June quarter 2019 by $1,441m.
   

The International Investment Position (IIP) has been revised back to the September quarter 2018. These revisions have decreased Australia's net IIP liability $3,594m to a net liability position of $997,966m at 30 June 2019. The financial account deficit has been revised down $663m to $3,267m at the June quarter 2019.

Seasonally adjusted and trend series have been revised due to the incorporation of revised estimates and the incorporation of estimates for the latest quarter and the annual re-analysis. For details on the seasonal re-analysis see the Annual seasonal re-analysis section.

Chain volume estimates, implicit price deflators and terms of trade indexes have been revised as a result of the incorporation of revised estimates and seasonal factors and the introduction of a new reference year. For details see the New base year and re-referencing of chain volume estimates, implicit price deflators and terms of trade indexes section for details.

Data in this issue aligns with the data in the September quarter 2019 issue of Australian National Accounts: National Income, Expenditure and Product (cat. no. 5206.0) to be released on 4 December 2019.

The seasonally adjusted and trend estimates of goods, services, primary income and secondary income have been revised as a result of the annual seasonal re-analysis. This re-analysis reviews the seasonal and trading day factors in more detail than is possible in the quarterly processing cycle and assesses the appropriateness of any prior corrections.

A new base year 2017-18 has been introduced into chain volume estimates, implicit price deflators, chain Laspeyres price and terms of trade indexes. These series have been re-referenced to 2017-18. Additivity has been preserved in the quarters subsequent to the new reference year as well as the annual sum of the quarters in the reference year. Re-referencing affects the levels, but not the movements of chain volume estimates, implicit price deflators and terms of trade indexes.

The updated annual GDP and GNI benchmarks released in the Australian System of National Accounts, 2018-19 (cat. no. 5204.0) on 25 October 2019 will be revised and incorporated into the quarterly national accounts with the September quarter 2019 issue of Australian National Accounts: National Income Expenditure and Product (cat. no. 5206.0) to be released on 4 December 2019. The revised benchmarks will change the level of the quarterly and annual GDP and GNI used in the ratios for table 23 of this publication. As the ratios using the currently available GDP and GNI would be inconsistent with the revised data, they have been suppressed in this issue. Table 23 in the time series spreadsheets released in conjunction with this publication will be updated with the release of the quarterly Australian National Accounts: National Income, Expenditure and Product (cat. no. 5206.0) on 4 December 2019.

A new Maritime Boundary Treaty between Australia and Timor-Leste came in to force on 30 August 2019. The new treaty provides exclusive jurisdiction of the former Joint Petroleum Development Area excluding Greater Sunrise in the Timor Sea to Democratic Republic of Timor-Leste. From this publication onwards, data contained within Balance of Payments and International Investment Position, Australia (cat. no. 5302.0) will reflect the new maritime boundary.

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.

Iron ore (in original terms)

• adjustments have been applied to iron ore lump in the June quarter (+$45m) and the September quarter (+$235m) 2019. Adjustments have been applied to iron ore fines in the June quarter (+$95m) and the September quarter (+$520m) 2019. When actual final transaction prices become available estimates are replaced with these data.
   

Coal (in original terms)

• adjustments have been applied to coal, coke and briquettes in the balance of payments series for the June quarter (-$5m) and the September quarter (-$20m) 2019. 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.

The data cubes International Trade: Supplementary Information, Financial Year, 2018-19 (cat. no. 5368.0.55.003) was released on the ABS website on 21 November 2019.