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5302.0 - Balance of Payments and International Investment Position, Australia, Sep 2005  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 01/12/2005   
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SEPTEMBER QUARTER KEY FIGURES

Jun Qtr 2005
Sep Qtr 2005
Jun Qtr 2005 to Sep Qtr 2005
$m
$m
% change

TREND ESTIMATES

Balance on current account
-13 046
-12 646
3
Balance on goods and services
-4 582
-4 071
11
Net income
-8 344
-8 442
-1

SEASONALLY ADJUSTED

Balance on current account
-12 016
-13 530
-13
Balance on goods and services
-4 272
-4 342
-2
Net income
-7 667
-9 026
-18

ORIGINAL

Balance on current account
-11 542
-15 207
-32
Balance on capital and financial account
11 212
14 862
33

Levels at end of period

Net international investment position (IIP)
527 035
538 986
2
Net equity
89 997
89 289
-1
Net debt
437 038
449 696
3

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



SEPTEMBER QUARTER KEY POINTS


BALANCE OF PAYMENTS

  • The current account deficit, seasonally adjusted, rose $1,514m (13%) to $13,530m. The deficit on the balance of goods and services rose $70m (2%) to $4,342m. The income deficit rose $1,359m (18%) to $9,026m.
  • In seasonally adjusted chain volume terms there was an increase of $665m (6%) in the deficit on goods and services. This could be expected to contribute -0.3 percentage points to growth in the September quarter 2005 volume measures of GDP.


INTERNATIONAL INVESTMENT POSITION
  • Australia's net IIP rose $12b to a net liability of $539b at 30 September 2005. Transactions of $15b mostly contributed to this increase. Partially offsetting the increase were price changes of -$3b. Net foreign debt liabilities rose $13b to $450b, while foreign net equities fell by $1b to $89b.


NOTES

REVISIONS

Table 36 summarises revisions, in original current price terms, since the last issue of this publication, for the last three years and six quarters.


Incorporation of new methodologies and data sources for travel services credits and debits along with the latest survey and administrative data has resulted in revisions to the current account back to September quarter 1971, increasing the 2004-05 current account deficit by $346m. A feature article, Changes to International Trade in Services Travel Statistics, detailing the changes to travel services credits and debits, was released on the ABS website on 4 October 2005. To access this article select: Themes then International Trade then Topics of Interest. The financial account and international investment position have been revised back to September quarter 2004 increasing Australia's net IIP liability as at 30 June 2005 by $10.2b.



FEATURE ARTICLE

An article on Foreign Ownership of Equity which will update the analysis last published in the September quarter 2004 issue, will be released in early 2006. The timing of the release will be advised in the November 2005 issue of International Trade in Goods and Services, Australia (cat. no. 5368.0) which will be relesed on 10 January 2006.



CHANGES IN THIS ISSUE

Seasonally Adjusted and Trend Estimates

The seasonally adjusted and trend estimates of the current account have been revised as a result of the annual seasonal reanalysis, which reviews the seasonal and trading day factors in more detail than is possible in the quarterly cycle and re-estimates and assesses the appropriateness of any prior corrections which have previously been applied. As a result of the reanalysis, two goods debits series, fuels and lubricants and goods procured in ports by carriers, have been identified as no longer being seasonal in nature. In previous issues users were advised that it was difficult to reliably estimate seasonal patterns in these two series.

As a result of the enhancements introduced to the seasonal adjustment process for income in the June quarter 2005 issue, seasonally adjusted and trend estimates are now presented at a finer level. Table 22 contains seasonally adjusted and trend income estimates for compensation of employees, direct investment equity, direct investment debt, portfolio investment equity, portfolio investment debt and other investment.

Table Changes

The inclusion of the new Table 22, has resulted in the existing tables numbered 22 through to 38 in this publication and in the electronic release of this publication being re-numbered as Tables 23 through to 39. This numbering will also be reflected in the AusStats tables. In addition, AusStats tables 72 to 88 have been incremented by one to maintain the numbering relationship between quarterly and financial year series.

Selected International Accounts Ratios - Table 35

Ratios of current account and international investment measures to both annual and annualised ( i.e. four quarter moving average ending on the reference quarter) GDP are presented in Table 35. The updated annual GDP benchmarks released on 7 November 2005 in the Australian System of National Accounts (cat. no. 5204.0) have been used in the annual ratios and are presented in this issue. These benchmarks will be incorporated into the quarterly national accounts with the September quarter 2005 issue of Australian National Accounts: National Income, Expenditure and Product (cat. no. 5206.0) to be released on 7 December 2005. The introduction of the benchmarks will change the level of the quarterly GDP used in the annualised ratios. Therefore, annualised ratios using the latest available quarterly GDP would be inconsistent with the annual ratios and have been suppressed in this issue. The annualised ratios will be presented in the Analysis and Comments section of the September quarter 2005 issue of Australian National Accounts: National Income, Expenditure and Product and Table 35 of this publication will be replaced on AusStats in conjunction with the release of the quarterly national accounts.

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: chain volume measures and implicit price deflators (Index numbers) - Financial year


69 Services debits: chain volume measures and implicit price deflators (Index numbers) - Financial year


70 Income credits: original - Financial year


71 Income debits: original - Financial year


73 Current transfers: original - Financial year


74 Capital account - Financial year


75 Financial Account - Financial year


76 International investment: Australian investment abroad - Financial year


77 International investment: foreign investment in Australia - Financial year


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


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


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


81 International investment: gross external debt liabilities - Financial year


83 Balance of payments: exchange rates - Financial year


84 International investment: foreign assets and liabilities - Financial year


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


89 International investment position: historical summary - Financial year


95 Quarterly combined current price seasonal adjustment factors, September 1959 to June 2006


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 September quarter 2005 was a deficit of $12,646m, a decrease of $400m (3%) on the revised deficit recorded for the June quarter 2005. The main contributor to the decrease in the deficit was goods credits which rose $1,088m (3%) partly offset by goods debits which rose $645m (2%).


In seasonally adjusted terms, the current account deficit rose $1,514m (13%) to $13,530m between the June and September quarters 2005 where:

  • the net income deficit rose $1,359m (18%) to $9,026m
  • the net goods deficit rose $220m (6%) to $4,070m
  • the net services deficit fell $150m (36%) to $272m.

Goods and Services

The trend estimate of the balance on goods and services at current prices was a deficit of $4,071m, a decrease of $511m (11%) on the June quarter 2005 deficit.


In seasonally adjusted terms, the balance on goods and services was a deficit of $4,342m, an increase of $70m (2%) on the June quarter 2005 deficit where:

  • the goods deficit rose $220m (6%) to $4,070m
  • the services deficit fell $150m (36%) to $272m.

The increase in the goods deficit resulted from higher goods imports, up $248m (1%), while goods exports were up by $28m.


The movements within goods credits were:

  • non-rural goods, up $115m
  • other goods, down $64m (3%)
  • rural goods, down $23m.

The increase in goods debits was driven by:
  • other goods, up $207m (16%)
  • consumption goods, up $186m (2%)
  • intermediate and other merchandise goods, up $134m (1%)
  • capital goods, down $279m (3%).

In seasonally adjusted volume terms, the deficit on goods and services was $11,266m, an increase of $665m (6%) on the $10,601m deficit recorded in the June quarter 2005. The net deficit on goods rose $675m (7%) to $10,532m. Goods credits fell $908m (3%) while goods debits fell $233m (1%). The net services balance was a deficit of $734m, a decrease of $11m on the June quarter 2005 deficit of $745m.


The increase of $665m 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 September quarter 2005 volume measures of GDP, assuming no significant revision to the GDP chain volume estimate for the June quarter 2005.

Goods and Services(a)
Graph: Goods and Services(a)



Goods Credits

The trend estimate of goods credits rose $1,088m (3%) to $35,626m in the September quarter 2005.


Seasonally adjusted, goods credits were $35,357m, up $28m on the June quarter 2005.


Rural goods (seasonally adjusted, current prices) fell $23m to $6,215m, mainly due to decreased volumes. Decreases were in:

  • wool and sheepskins, down $121m (16%), with volumes down 16% and prices up 1%
  • meat and meat preparations, down $109m (6%), with volumes down 5% and prices down 1%.

These decreases were largely offset by:
  • cereal grains and cereal preparations, up $121m (13%), with volumes up 20% and prices down 6%
  • other rural, up $86m (3%), on increased prices.

Non-rural goods (seasonally adjusted, current prices) rose $115m to $27,117m, with volumes down 3% and prices up 4%. The largest increases were in:
  • coal, coke and briquettes, up $315m (6%), with volumes down 4% and prices up 10%
  • machinery, up $45m (2%), on increased prices
  • metal ores and minerals, up $22m, with volumes down 2% and prices up 3%.

These increases were partly offset by:
  • other non-rural, down $125m (4%), with volumes down 6% and prices up 2%
  • transport equipment, down $95m (6%), with volumes down 7% and prices up 1%.

Other goods (seasonally adjusted, current prices) fell $64m (3%) to $2,025m, driven by a fall in goods for processing, down $122m (41%) partly offset by a rise in non-monetary gold, up $48m (3%).

General Merchandise Credits(a)
Graph: General Merchandise Credits(a)



Goods Debits

The trend estimate of goods debits rose $645m (2%) to $39,400m in the September quarter 2005.


In seasonally adjusted current price terms, goods debits rose $248m (1%) to $39,427m.


Consumption goods (seasonally adjusted, current prices) rose $186m (2%) to $12,194m, with both volumes and prices up 1%. The largest increases were in:

  • consumption goods n.e.s., up $81m (2%), with volumes up 1% and prices up 2%
  • toys, books and leisure goods, up $56m (6%), on increased volumes
  • household electrical items, up $50m (5%), with volumes up 2% and prices up 3%.

Capital goods (seasonally adjusted, current prices) fell $279m (3%) to $8,903m, with volumes down 1% and prices down 2%. The largest decreases were in:
  • civil aircraft, down $304m, largely on decreased volumes
  • capital goods n.e.s., down $51m (4%), with volumes down 5% and prices up 1%
  • ADP equipment, down $44m (3%), with volumes down 1% and prices down 2%.

These decreases were partly offset by:
  • telecommunications equipment, up $86m (8%), with volumes up 10% and prices down 2%
  • industrial transport equipment n.e.s., up $68m (5%), with volumes up 4% and prices up 2%.

Intermediate and other merchandise goods (seasonally adjusted, current prices) rose $134m (1%) to $16,795m, with volumes down 2% and prices up 3%. The largest increases were in:
  • processed industrial supplies, up $133m (4%), on increased volumes
  • fuels and lubricants, up $70m (2%), with volumes down 14% and prices up 18%
  • organic and inorganic chemicals, up $65m (7%), with volumes up 10% and prices down 3%
  • other parts for capital goods, up $44m (2%), on increased volumes.

Partly offsetting these increases were falls in:
  • other merchandise goods, down $100m (31%), on decreased volumes
  • parts for transport equipment, down $85m (5%), with volumes down 6% and prices up 1%.

Other goods (seasonally adjusted, current prices) rose $207m (16%) to $1,535m driven by rises in non-monetary gold and goods for processing.

General Merchandise Debits(a)
Graph: General Merchandise Debits(a)



Services

The trend estimate of net services was a deficit of $297m, a fall of $68m (19%) on the June quarter 2005 deficit of $365m.


In seasonally adjusted terms, net services recorded a deficit of $272m, a fall of $150m (36%) on the June quarter 2005.


Services credits, in seasonally adjusted terms at current prices, rose $160m (2%) to $9,375m, largely on increased prices. The largest increases in services credits were in:

  • travel services, up $158m (3%), with both volumes and prices up 2%
  • passenger and other transportation services, up $30m (2%), on increased prices.

These increases were partly offset by other services, down $30m (1%), with volumes down 3% and prices up 1%.


Services debits, in seasonally adjusted terms at current prices, rose $10m to $9,647m. This was mainly due to travel services, up $56m (1%), on increased volumes.


This increase was largely offset by:

  • other services, down $34m (1%), on decreased volumes
  • passenger and other transportation services, down $12m (1%) with volumes down 3% and prices up 2%.

Seasonally adjusted, tourism related services credits rose $108m (2%) to $5,999m while tourism related services debits rose $15m to $5,069m.


Implicit Price Deflator

In seasonally adjusted terms, the implicit price deflator (IPD) for total goods and services credits rose 2.8%. In original terms, it rose by 3.1%. The chain Laspeyres price index for goods and services credits rose 3.2%, indicating that the compositional effects had a downward influence on the movement in the IPD. The IPD for goods credits rose 3.3% and the IPD for services credits rose 1.4%.


The total goods and services debits IPD rose 1.0% in seasonally adjusted terms. In original terms, it rose by 0.7%. The chain Laspeyres price index for debits rose 1.5%.

IMPLICIT PRICE DEFLATOR(a)
Graph: IMPLICIT PRICE DEFLATOR(a)



Relationship to IPI and EPI

In original terms, the implicit price deflator for total goods credits rose 3.6%. The chain Laspeyres price index for goods exports rose 3.7%. The export price index (EPI) rose 4.7% during the September quarter 2005.


During the September quarter 2005, the goods imports IPD (in original terms) rose 0.9% and the chain Laspeyres price index for goods imports rose 2.0%. The import price index (IPI) rose 2.6%.


Terms of trade

Australia's seasonally adjusted terms of trade rose 1.8% to 118.8, with an increase of 2.8% in the IPD for goods and services credits and a 1.0% increase in the goods and services debits IPD. The trend estimate of the terms of trade increased 2.1% to 118.9.


Income

The trend estimate of the net income deficit rose $98m (1%) to $8,442m.


In seasonally adjusted terms, the net income deficit rose $1,359m (18%) to $9,026m. Income credits fell $303m (5%) to $5,398m and income debits rose $1,056m (8%) to $14,424m.


In original terms, the net income deficit rose $2,139m (28%) to $9,735m. Income credits fell $529m (9%) to $5,233m and income debits rose $1,610m (12%) to $14,968m.


The increase in the net income deficit was driven by increased income debits on direct investment equity as a result of strength in the resource sector. The strength resulted from strong coal and oil prices, increased production, and a slight decline in the AUD against the USD.

Net Income
Graph: Net Income



Current Transfers

In seasonally adjusted terms, the net current transfers deficit was $162m, an increase of $85m on the $77m deficit recorded in the June quarter 2005. Current transfer credits rose $3m and current transfer debits rose $88m (8%).



CAPITAL AND FINANCIAL ACCOUNT

Capital Account

In original terms, the capital account surplus was $359m, up $172m on the June quarter 2005 surplus. Capital transfer credits rose $165m (29%) to $738m, while capital transfer debits fell $18m (5%) to $357m.


Financial Account

In original terms, the balance on financial account recorded a net inflow of $14.5b, with a $16.2b inflow of debt and a $1.7b outflow of equity.


Direct investment in Australia recorded an inflow of $4.6b in the September quarter 2005, a turnaround of $65.0b on the June quarter 2005 outflow of $60.4b. Australia's direct investment abroad recorded an outflow of $6.2b, a turnaround of $74.9b on the previous quarter's inflow of $68.6b.


Portfolio investment recorded a net inflow of $5.0b, a decrease of $11.4b on the net inflow of $16.5b in June quarter 2005.


Other investment recorded a net inflow of $2.3b, a turnaround of $7.7b on the net outflow of $5.4b last quarter.


Reserve assets recorded a net inflow of $8.6b, a turnaround of $17.7b on the net outflow of $9.1b last quarter due to a decrease in foreign exchange reserves.



INTERNATIONAL INVESTMENT POSITION


INTERNATIONAL INVESTMENT

Australia's net international investment position at 30 September 2005 was a net foreign liability of $539.0b, up $12.0b (2.3%) on 30 June 2005. The increase consisted of:

  • net transactions of $14.5b
  • price changes of -$2.7b
  • exchange rate changes of -$0.2b
  • other adjustments of $0.4b.

During the September quarter 2005, the level of net debt liabilities rose $12.7b (2.9%) to $449.7b. Net debt raisings of $16.2b and other adjustments of $0.6b were offset by price changes of -$3.4b and exchange rate changes of -$0.8b.


During the September quarter 2005, the level of net equity liabilities fell $0.7b (0.8%) to $89.3b, reflecting transactions of -$1.7b and other adjustments of -$0.2b. Partially offsetting these decreases were price changes of $0.6b and exchange rate changes of $0.6b.


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