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5302.0 - Balance of Payments and International Investment Position, Australia, Mar 2005  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 31/05/2005   
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MARCH QUARTER KEY FIGURES

Dec Qtr 2004
Mar Qtr 2005
Dec Qtr 2004 to Mar Qtr 2005
$m
$m
% change

TREND ESTIMATES

Balance on current account
-15,047
-16,075
-7
Balance on goods and services
-6,896
-7,279
-6
Net income
-8,038
-8,666
-8

SEASONALLY ADJUSTED

Balance on current account
-15,405
-15,648
-2
Balance on goods and services
-7,094
-7,072
-
Net income
-8,215
-8,439
-3

ORIGINAL

Balance on current account
-16,313
-13,098
20
Balance on capital and financial account
16,739
13,532
-19

Levels at end of period

Net international investment position (IIP)
541,204
554,698
2
Net equity
119,821
130,013
9
Net debt
421,383
424,685
1

- nil or rounded to zero (including null cells)

Current Account, Main aggregates - Trend estimates at current prices
Graph: Current Account Main aggregates Trend estimates at current prices

International Investment, Levels at end of period
Graph: International Investment Levels at end of period



MARCH KEY POINTS


BALANCE OF PAYMENTS

  • The current account deficit, seasonally adjusted, rose $243m (2%) to $15,648m. The deficit on the balance on goods and services fell $22m to $7,072m. The income deficit rose $224m (3%) to $8,439m.
  • In seasonally adjusted chain volume terms there was an increase of $689m (5%) in the deficit on goods and services. This could be expected to contribute -0.3 percentage points to growth in the March quarter 2005 volume measures of GDP.


INTERNATIONAL INVESTMENT POSITION
  • Australia's net IIP rose $13b to a net liability of $555b at 31 March 2005. Transactions of $13b and price changes of $3b contributed to this increase. Partly offsetting these increases were exchange rate changes of -$3b. Net equity liabilities rose by $10b, to $130b, while net debt rose by $3b to $425b.


NOTES

REVISIONS

Table 35 summarises revisions, in original current price terms, since the last issue of this publication, for the last three years and six quarters.


Revisions and timing adjustments for civil aircraft have been incorporated into estimates of the imports of goods and services since the March 2005 month release of International Trade in Goods and Services, Australia (cat. no. 5368.0). These changes increase the imports of civil aircraft in December quarter 2004. These aircraft had originally been excluded from December quarter 2004 estimates as the ABS was initially advised that they were under operating lease arrangements, with ownership remaining with a foreign entity. An equivalent revision has been made to the March quarter 2005 issue of Private New Capital Expenditure, Australia (cat. no. 5625.0) which was released on 26 May 2005. As capital expenditure and associated imports balance out in the national accounts, no revision to GDP will result from the addition of these aircraft.


Incorporation of the latest survey and administrative data and the above revisions for civil aircraft have resulted in revisions to the current account back to September quarter 2003, increasing the 2003-04 current account deficit by $305m and increasing the deficit for the first 6 months of 2004-05 by $317m. The financial account and international investment position have been revised back to September quarter 2003, decreasing Australia's net IIP liability as at 31 December 2004 by $7,260m.



CHANGES TO AUSSTATS TABLES

As advised to AusStats clients with the December quarter 2004 issue of this publication, the AusStats tables listed on pages 5 to 7 are now only presented as excel spreadsheets (i.e. in .xls format). This format replaces the previous time series spreadsheets that were produced in .wks (lotus) format. As part of this change, some of the numbers used to identify the AusStats tables have changed, but table names and content have largely remained unchanged. A concordance between the previous and current table numbers is available on AusStats. The numbering of tables in the publication and AusStats is now aligned and, as a result, Appendix 2 (AusStats table concordance) has been removed.



INQUIRIES

For further information contact Tom Jebbink on Canberra (02) 6252 5540 for balance of payments estimates, and Sawbhag Naidu on Canberra (02) 6252 5541 for international investment estimates.



TABLES ON AUSSTATS


TABLES AVAILABLE ON AUSSTATS

Data available on the ABS web site <www.abs.gov.au> include:

  • longer time series of all tables contained in this publication
  • additional tables as listed below:

51 Balance of payments: summary, original - Financial year


52 International investment position by net foreign equity and net foreign debt - Financial year


53 International investment position by foreign assets by equity and debt - Financial year


54 International investment position by foreign liabilities by equity and debt - Financial year


56 Goods and services: terms of trade, original - Financial year


57 Goods credits: original - Financial year


58 Goods debits: original - Financial year


63 Goods credits: implicit price deflators (Index numbers) - Financial year


64 Goods debits: implicit price deflators (Index numbers) - Financial year


65 Services credits: original - Financial year


66 Services debits: original - Financial year


68 Services credits: implicit price deflators (Index numbers) - Financial year


69 Services debits: implicit price deflators (Index numbers) - Financial year


70 Income credits: original - Financial year


71 Income debits: original - Financial year


72 Current transfers: original - Financial year


73 Capital account - Financial year


74 Financial Account - Financial year


75 International investment: Australian investment abroad - Financial year


76 International investment: foreign investment in Australia - Financial year


77 International investment: levels of Australian investment abroad - Financial year


78 International investment: levels of foreign investment in Australia - Financial year


79 International investment: foreign debt levels at the end of period - Financial year


80 International investment: gross external debt liabilities - Financial year


82 Balance of payments: exchange rates - Financial year


83 International investment: foreign assets and liabilities - Financial year


84 Balance of payments: ratios of current account measures to GDP - Financial year


88 International investment position: historical summary - Financial year


101 Merchandise exports by SITC division on a Balance of payments basis, chain volume measures


102 Merchandise exports by SITC division on a Balance of payments basis, implicit price deflators


103 Merchandise exports by SITC division and section on a Recorded trade basis, chain volume measures


104 Merchandise exports by SITC division and section on a Recorded trade basis, implicit price deflators


105 Merchandise imports by End-Use categories on a Balance of payments basis, chain volume measures


106 Merchandise imports by End-Use categories on a Balance of payments basis, implicit price deflators


107 Merchandise imports by SITC division and section on a Recorded trade basis, chain volume measures


108 Merchandise imports by SITC division and section on a Recorded trade basis, implicit price deflators


109 Services credits and debits, confidentialised version, chain volume measures


110 Services credits and debits, confidentialised version, implicit price deflators


111 Balance of payments: current account transactions, seasonally adjusted and trend estimates (percentage change) - Quarter


112 Balance of payments: goods and services, implicit price deflators, original (index) - Quarter


113 Balance of payments: original and seasonally adjusted chain volume measures and indexes (percentage change) - Quarter


114 Balance of payments: goods credits, chain volume measures, original - Quarter


115 Balance of payments: goods debits, chain volume measures, original - Quarter


116 Balance of payments: services credits and debits, current prices, original and seasonally adjusted - Quarter


117 International investment: foreign assets, by direction and type of investment - Quarter


118 International investment: foreign liabilities, by direction and type of investment - Quarter


119 International investment: foreign debt transactions - Quarter


120 International investment: interest income on foreign debt - Quarter


214 Balance of payments: goods credits, chain volume measures, original - Financial year


215 Balance of payments: goods debits, chain volume measures, original -Financial year


216 Balance of payments: services credits and debits, current prices, original and seasonally adjusted - Financial year


217 International investment: foreign assets, by direction and type of investment - Financial year


218 International investment: foreign liabilities, by direction and type of investment - Financial year


219 International investment: foreign debt transactions - Financial year


220 International investment: interest income on foreign debt - Financial year



ANALYSIS AND COMMENTS


BALANCE OF PAYMENTS


CURRENT ACCOUNT

The trend estimate of the balance on current account for the March quarter 2005 was a deficit of $16,075m, an increase of $1,028m (7%) on the deficit recorded for the December quarter 2004. The main contributors to the increase in the deficit were income debits, which rose $774m (6%), goods debits, which rose $376m (1%), services debits, which rose $199m (2%) and goods credits, which fell $54m. These effects were partly offset by increases in services credits of $246m (3%) and income credits of $146m (3%).


In seasonally adjusted terms, the current account deficit rose $243m (2%) to $15,648m in the March quarter 2005. The net deficit on goods rose $231m (3%) to $6,908m. The net deficit on income rose $224m (3%) to $8,439m. The net services deficit fell $253m to $164m.


Goods and Services

The trend estimate of the balance on goods and services at current prices was a deficit of $7,279m, an increase of $383m (6%) on the December quarter 2004 deficit.


In seasonally adjusted current price terms, the balance on goods and services was a deficit of $7,072m a decrease of $22m on the December quarter deficit. The deficit on goods was $6,908m, an increase of $231m (3%) on the deficit of $6,677m in the December quarter 2004. Lower goods exports, down $296m (1%), were partly offset by lower goods imports, down $65m. The decrease in goods credits was driven by rural goods, down $286m (5%) and by other goods, down $173m (9%), partly offset by non-rural goods, up $163m (1%). The decrease in goods debits was driven by capital goods, down $409m (4%), intermediate and other merchandise goods, down $132m (1%), and other goods, down $99m (8%), largely offset by consumption goods, up $575m (5%).


In seasonally adjusted volume terms, the deficit on goods and services was $14,613m, an increase of $689m (5%) on the $13,924m deficit recorded in the December quarter 2004. The goods deficit rose $834m (7%) to $12,977m. Goods credits rose $29m and goods debits rose $863m (2%). The net services balance was a deficit of $1,636m, a decrease of $143m (8%) on the December quarter 2004 deficit of $1,779m.


The increase of $689m in the deficit on goods and services in volume terms could be expected to make a contribution to growth of -0.3 percentage points in the March quarter 2005 volume measures of GDP, assuming no significant revision to the GDP chain volume estimate for the December quarter 2004.

Goods and Services(a)
Graph: Goods and Services



Goods Credits

The trend estimate of goods credits fell $54m to $30,716m in the March quarter 2005. Seasonally adjusted, goods credits were $30,526m, down $296m (1%) on the December quarter 2004, driven by decreases in exports of rural and other goods.


Rural goods (seasonally adjusted, current prices) fell $286m (5%) to $6,039m, mainly due to decreased volumes. The largest decreases were in other rural goods, down $182m (7%), on decreased volumes, cereal grains and cereal preparations, down $109m (8%), with volumes down 10% and prices up 2%, and wool and sheepskins, down $39m (6%), with volumes down 4% and prices down 2%. Partly offsetting these decreases was meat and meat preparations, up $44m (3%), with volumes up 4% and prices down 1%.


Non-rural goods (seasonally adjusted, current prices) rose $163m (1%) to $22,636m, with volumes up 2% and prices down 1%. The largest increases were in metal ores and minerals, up $129m (3%), with volumes up 5% and prices down 2%, other non-rural, up $83m (3%), with volumes up 2% and prices up 1%, and machinery, up $82m (4%), with volumes up 7% and prices down 3%. These increases were partly offset by falls in transport equipment, down $59m (5%), other manufactures, down $30m (1%), both on decreased volumes, and coal, coke and briquettes, down $25m (1%), on decreased prices.


Other goods (seasonally adjusted, current prices) fell $173m (9%) to $1,851m, driven by a fall in non-monetary gold.

General Merchandise Credits(a)
Graph: General Merchandise Credits



Goods Debits

The trend estimate of goods debits rose $376m (1%) to $37,714m in the March quarter 2005. In seasonally adjusted current price terms, goods debits fell $65m to $37,434m.


Consumption goods imports (seasonally adjusted, current prices) rose $575m (5%) to $12,079m, with a rise in volumes of 6% and a fall in prices of 1%. The largest increases were in non-industrial transport equipment, up $440m (14%), with volumes up 15% and prices down 1%, consumption goods n.e.s., up $146m (4%), with volumes up 5% and prices down 1%, and textiles, clothing and footwear, up $64m (5%), with volumes up 8% and prices down 3%. Partly offsetting these increases were falls in toys, books and leisure goods, down $70m (7%), with volumes down 6% and prices down 1%, and household electrical items, down $36m (4%), with volumes down 2% and prices down 1%.


Capital goods imports (seasonally adjusted, current prices) fell $409m (4%) to $8,828m, due to decreased prices. Civil aircraft were down $786m (81%), largely on decreased volumes. Partly offsetting this decrease were rises in telecommunications equipment, up $180m (16%), with volumes up 35% and prices down 14%, machinery and industrial equipment, up $77m (2%), due to increased prices, industrial transport equipment n.e.s., up $45m (4%), with volumes up 5% and prices down 1%, capital goods n.e.s., up $39m (3%), with volumes up 5% and prices down 1%, and ADP equipment, up $36m (3%), with volumes up 9% and prices down 5%.


Intermediate and other merchandise goods (seasonally adjusted, current prices) fell $132m (1%) to $15,346m, with volumes up 1% and prices down 2%. The largest decrease was in fuels and lubricants, down $426m (12%), with volumes down 5% and prices down 7%. Partly offsetting this decrease were rises in iron and steel, up $158m (23%), with volumes up 15% and prices up 7%, and parts for transport equipment, up $136m (8%), with volumes up 10% and prices down 1%.


Other goods (seasonally adjusted, current prices) fell $99m (8%) to $1,181m driven by a fall in non-monetary gold.

General Merchandise Debits(a)
Graph: General Merchandise Debits



Services

The trend estimate of net services was a deficit of $281m, a fall of $47m (14%) on the December quarter 2004 deficit of $328m. In seasonally adjusted terms, net services recorded a deficit of $164m, a fall of $253m on the December quarter 2004.


Services credits, in seasonally adjusted terms at current prices, rose $414m (5%) to $9,184m, with volumes up 4% and prices up 1%. Services debits, in seasonally adjusted terms at current prices, rose $161m (2%) to $9,348m, largely on increased volumes. The largest increases in services credits were in travel services, up $247m (6%), and in passenger and other services, up $115m (6%). The largest increases in services debits were in other services, up $80m (3%), and in travel services, up $78m (2%).


Seasonally adjusted, tourism related services credits rose $428m (8%) to $5,709m and tourism related services debits rose $87m (2%) to $4,749m.


Implicit Price Deflator

In seasonally adjusted terms, the implicit price deflator (IPD) for total goods and services credits fell 0.6%. In original terms, it fell by 0.1%. The chain Laspeyres price index for goods and services credits fell 1.0%, indicating that the compositional effects had an upward influence on the movement in the IPD. The original IPD for goods credits fell 0.6% and the original IPD for services credits rose 0.7%.


The total goods and services debits IPD fell 1.8% in seasonally adjusted terms. In original terms, it fell by 1.6%. The chain Laspeyres price index for debits fell 1.8%.

IMPLICIT PRICE DEFLATOR(a)
Graph: IMPLICIT PRICE DEFLATOR



Relationship to IPI and EPI

In original terms, the implicit price deflator for total goods credits fell 0.6%. The chain Laspeyres price index for goods exports fell 1.4%. The export price index (EPI) fell 0.5% during the March quarter 2005.


During the March quarter 2005, the goods imports IPD (in original terms) fell 1.7% and the chain Laspeyres price index for goods imports fell 1.9%. The import price index (IPI) fell 2.4%.


Terms of trade

Australia's seasonally adjusted terms of trade rose 1.1% to 116.8, with a decrease of 0.6% in the IPD for goods and services credits and a 1.8% decrease in the goods and services debits IPD. The trend estimate of the terms of trade increased 1.4% to 117.0.


Income

The trend estimate of the net income deficit rose $628m (8%) to $8,666m. In seasonally adjusted terms, the net income deficit rose $224m (3%) to $8,439m.


Income credits, seasonally adjusted, rose $124m (3%) to $5,015m and income debits rose $348m (3%) to $13,454m.


In original terms, income credits fell $126m (3%) to $4,879m and income debits rose $352m (3%) to $13,198m.

Net Income
Graph: Net Income



Current Transfers

In seasonally adjusted terms, the net current transfers deficit was $137m, an increase of $41m on the $96m deficit recorded in the December quarter 2004. Current transfer credits rose $5m and current transfer debits rose $46m (4%).



CAPITAL AND FINANCIAL ACCOUNT

Capital Account

In original terms, the capital account surplus was $244m, down $16m (6%) on the December quarter 2004 surplus. Capital transfer credits rose $25m (4%) to $687m, and capital transfer debits rose $34m (9%) to $414m.


Financial Account

In original terms, the balance on the financial account recorded a net inflow of $13.3b, with a $9.7b inflow of debt and a $3.6b inflow of equity.


Direct investment in Australia recorded an inflow of $5.5b in the March quarter 2005, a $47.3b decrease on the December quarter 2004 inflow of $52.9b. Australia's direct investment abroad recorded an outflow of $3.6b, which is $10.5b lower than the previous quarter's outflow of $14.1b. This is the seventeenth consecutive quarterly outflow, bringing the total outflow on Australia's direct investment abroad to $87.1b since the March quarter 2001.


Portfolio investment recorded a net inflow of $2.1b, a $35.1b turnaround on the net outflow of $33.1b in December quarter 2004.


Other investment recorded a net inflow of $8.9b, a decrease of $8.6b on the net inflow of $17.5b last quarter.


Reserve assets recorded a net inflow of $0.8b, a turnaround of $7.7b on the previous quarter's outflow of $6.9b, due to a decrease in foreign exchange reserves.



INTERNATIONAL INVESTMENT POSITION


INTERNATIONAL INVESTMENT

Australia's net international investment position at 31 March 2005 was a net foreign liability of $554.7b, up $13.5b (2.5%) on 31 December 2004. The increase consisted of:

  • net transactions of $13.3b;
  • price changes of $3.5b;
  • exchange rate changes of -$3.1b; and
  • other adjustments of -$0.2b.

During the March quarter 2005, the level of net debt liabilities rose $3.3b (0.8%) to $424.7b. Net debt raisings of $9.7b were offset by exchange rate changes of -$2.8b, price changes of -$2.7b and other adjustments of -$0.8b.


During the March quarter 2005, the level of net equity liabilities rose $10.2b (8.5%) to $130.0b, reflecting price changes of $6.2b, transactions of $3.6b and other adjustments of $0.6b. Partially offsetting the increase was exchange rate changes of -$0.3b.


As at 31 March 2005, the ratio of Australia's net IIP to GDP using the latest available GDP (for the year ending 31 December 2004) was 66.2%. This compares with 61.1% one year ago and 52.7% a decade ago.


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