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5302.0 - Balance of Payments and International Investment Position, Australia, June 2013 Quality Declaration 
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 03/09/2013   
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ANALYSIS AND COMMENTS


BALANCE OF PAYMENTS


CURRENT ACCOUNT

In original current price terms, the June quarter 2013 current account deficit was $5,488m, a fall of $4,244m (44%) on the March quarter 2013 deficit.

Current account balances, in seasonally adjusted and trend terms at current prices, are shown in the following table.

BALANCE ON CURRENT ACCOUNT IN CURRENT PRICES - June Quarter 2013

Change in:
Current prices
Current prices
Current prices
$m
$m
%

Seasonally Adjusted

Balance on current account
-9 350
-610
-7.0
Balance on goods and services
-18
-140
(a). .
Net goods
2 886
-197
-6.4
Net services
-2 904
57
1.9
Net primary income
-9 008
-479
-5.6
Net secondary income
-324
9
2.7

Trend

Balance on current account
-8 556
2 429
22.1
Balance on goods and services
511
2 265
(a). .
Net goods
3 425
2 212
182.4
Net services
-2 914
54
1.8
Net primary income
-8 741
161
1.8
Net secondary income
-326
2
0.6

. . not applicable
(a) See paragraph 5 of the Explanatory Notes.



VOLUMES AND PRICES

Goods and Services

In seasonally adjusted chain volume terms, the balance on goods and services was a surplus of $7,152m, a fall of $154m (2%) on the March quarter 2013 surplus of $7,306m.

The net surplus on goods fell $595m (5%) on the March quarter 2013 surplus of $11,076m. Goods credits rose $1,028m (1%) and goods debits rose $1,623m (3%). The net deficit on services fell $441m (12%) on the March quarter 2013 deficit of $3,770m.

The decrease in the balance on goods and services surplus, in seasonally adjusted chain volume terms, is expected to detract 0.04 percentage points from growth in the June quarter 2013 volume measure of GDP, assuming no significant revision to the GDP chain volume estimate for the March quarter 2013.

GOODS AND SERVICES, CHAIN VOLUME MEASURES (a)
Graph: GOODS AND SERVICES, CHAIN VOLUME MEASURES (a)



Terms of Trade and Implicit Price Deflator(footnote 1)

Australia's seasonally adjusted terms of trade on net goods and services for the June quarter 2013 rose 0.1% to 91.5 with an increase of 0.9% in the implicit price deflator (IPD) for goods and services credits and an increase of 0.7% in the IPD for goods and services debits.

In trend terms, the terms of trade for net goods and services rose 1.1% to 91.3.

IMPLICIT PRICE DEFLATOR AND TERMS OF TRADE (a)
Graph: IMPLICIT PRICE DEFLATOR AND TERMS OF TRADE (a)



Goods

The trend estimate of net goods at current prices for the June quarter 2013 was a surplus of $3,425m, a rise of $2,212m (182%) on the March quarter 2013 surplus of $1,213m.

In seasonally adjusted terms at current prices, net goods was a surplus of $2,886m, a fall of $197m (6%) on the March quarter 2013 surplus of $3,083m.

GOODS, Price and volume analysis: Seasonally Adjusted - June Quarter 2013

Change in:
Current prices
Current prices
Chain volume measures(a)
Implicit price deflators(a)
$m
%
%
%

Exports
1 513
2.4
1.5
0.9
Rural goods
431
4.7
4.6
0.1
Non-rural goods
1 072
2.1
0.5
1.6
Net exports of goods under merchanting
-23
-38.3
-37.3
-1.0
Non-monetary gold
32
0.8
10.5
-8.7
Imports
1 709
2.8
2.7
0.1
Consumption goods
-239
-1.4
-2.1
0.8
Capital goods
1 569
10.5
8.8
1.5
Intermediate and other merchandise goods
244
0.9
1.6
-0.7
Non-monetary gold
136
12.6
24.5
-9.5

(a) Reference year 2010-11



Services

SERVICES, Price and volume analysis: Seasonally Adjusted - June Quarter 2013

Change in:
Current prices
Current prices
Chain volume measures(a)
Implicit price deflators(a)
$m
%
%
%

Exports
103
0.8
0.1
0.7
Manufacturing services on physical inputs owned by others
-
-
-
-
Maintenance and repair services n.i.e.
4
28.6
30.8
0.5
Transport
-21
-1.4
-1.5
0.2
Travel
94
1.2
0.4
0.8
Other services
26
0.7
-0.1
0.7
Imports
46
0.3
-2.7
3.0
Manufacturing services on physical inputs owned by others
-
-
-
-
Maintenance and repair services n.i.e.
-67
-42.1
-44.4
4.1
Transport
-49
-1.1
-1.7
0.6
Travel
51
0.8
-2.9
3.8
Other services
111
2.2
-1.8
4.1

- nil or rounded to zero (including null cells)
(a) Reference year 2010-11



GOODS CREDITS

The trend estimate of goods credits at current prices rose $1,851m (3%) to $64,551m in the June quarter 2013.

In seasonally adjusted terms at current prices, goods credits rose $1,513m (2%) to $64,740m, with volumes up 1% and prices up 1%.


Rural Goods

Exports of rural goods, in seasonally adjusted terms at current prices, rose $431m (5%) to $9,536m, with volumes up 5%. The main components contributing to the rise were:
  • other rural, up $261m (6%), with volumes up 7% and prices down 1%
  • cereal grains and cereal preparations, up $106m (5%), with volumes up 5%.


Non-rural Goods

Exports of non-rural goods, in seasonally adjusted terms at current prices, rose $1,072m (2%) to $51,258m, with volumes up 1% and prices up 2%. The main components contributing to the rise were:
  • metal ores and minerals, up $848m (4%), with volumes up 3% and prices up 1%
  • other non-rural (incl. sugar and beverages), up $195m (8%), with volumes up 6% and prices up 2%.
SELECTED MAJOR COMMODITIES, CURRENT PRICES(a)
Graph: SELECTED MAJOR COMMODITIES, CURRENT PRICES(a)



Net Exports of Goods Under Merchanting

Net exports of goods under merchanting, in seasonally adjusted terms at current prices, fell $23m (38%), with volumes down 37% and prices down 1%.


Non-monetary Gold

Non-monetary gold, in original and seasonally adjusted terms at current prices, rose $32m (1%), with volumes up 10% and prices down 9%.


GOODS DEBITS

The trend estimate of goods debits at current prices fell $360m (1%) to $61,126m in the June quarter 2013.

In seasonally adjusted terms at current prices, goods debits rose $1,709m (3%) to $61,853m,with volumes up 3%.


Consumption Goods

Imports of consumption goods, in seasonally adjusted terms at current prices, fell $239m (1%) to $17,413m with volumes down 2% and prices up 1%. The main component contributing to the fall was non-industrial transport equipment, down $206m (4%), with volumes down 3% and prices down 1%.


Capital Goods

Imports of capital goods, in seasonally adjusted terms at current prices, rose $1,569m (10%) to $16,532m with volumes up 9% and prices up 2%. The main components contributing to the rise were:
  • capital goods n.e.s., up $1,018m (32%), with volumes up 30% and prices up 2%
  • civil aircraft and confidentialised items, up $585m (92%), with volumes up 92%.

Partly offsetting these rises was the ADP equipment component, down $160m (8%), with volumes down 12% and prices up 5%.


Intermediate and Other Merchandise Goods

Imports of intermediate and other merchandise goods, in seasonally adjusted terms at current prices, rose $244m (1%) to $26,696m, with volumes up 2% and prices down 1%. The main components contributing to the rise were:
  • fuels and lubricants, up $255m (3%), with volumes up 8% and prices down 5%
  • processed industrial supplies n.e.s., up $84m (1%), with volumes down 1% and prices up 2%.

Partly offsetting these rises was the other parts for capital goods component, down $112m (3%), with volumes down 5% and prices up 1%.


Non-monetary Gold

Imports of non-monetary gold, in original and seasonally adjusted terms at current prices, rose $136m (13%) to $1,213m, with volumes up 24% and prices down 10%.


SERVICES

The trend estimate of net services at current prices was a deficit of $2,914m, a fall of $54m (2%) on the March quarter 2013 deficit of $2,968m.

In seasonally adjusted terms at current prices, net services was a deficit of $2,904m, a fall of $57m (2%) on the March quarter 2013 deficit of $2,961m.


Services Credits

Services credits, in seasonally adjusted terms at current prices, rose $103m (1%) to $13,154m with prices up 1%. The main component contributing to the rise was travel, up $94m (1%), with prices up 1%.

In seasonally adjusted terms, tourism related service credits rose $73m (1%) to $8,261m.


Services Debits

Services debits, in seasonally adjusted terms at current prices, rose $46m to $16,058m, with volumes down 3% and prices up 3%. The main component contributing to the rise was other services, up $111m (2%), with volumes down 2% and prices up 4%.

Partly offsetting this rise was the maintenance and repair services n.i.e. component, down $67m (42%), with volumes down 44% and prices up 4%.

In seasonally adjusted terms, tourism related service debits fell $32m to $8,339m.


PRIMARY INCOME

The trend estimate of the net primary income deficit at current prices fell $161m (2%) to $8,741m in the June quarter 2013.

In seasonally adjusted terms, the net primary income deficit rose $479m (6%) to $9,008m in the June quarter 2013.

NET PRIMARY INCOME
Graph: NET PRIMARY INCOME



Primary Income Credits

Primary income credits, in seasonally adjusted terms at current prices, rose $512m (5%) to $10,977m. The main components contributing to the rise were:
  • portfolio investment assets, investment income on equity and investment fund shares, up $396m (15%)
  • other investment assets, up $40m (8%).

Partly offsetting these rises was a $11m (22%) fall in reserve assets.


Primary Income Debits

Primary income debits, in seasonally adjusted terms at current prices, rose $991m (5%) to $19,985m. The main components contributing to the rise were:
  • portfolio investment liabilities, investment income on equity and investment fund shares, up $559m (15%)
  • direct investment liabilities, income on equity and investment fund shares, up $217m (3%).

Partly offsetting these rises was a $107m (10%) fall in compensation of employees.


SECONDARY INCOME

The trend estimate of the net secondary income deficit at current prices, fell $2m (1%) to $326m in the June quarter 2013.

In seasonally adjusted terms, the net secondary income deficit at current prices, fell $9m (3%) to $324m in the June quarter 2013.


FINANCIAL ACCOUNT

The balance on financial account, in original terms, recorded a net inflow of $5.6b, with a net inflow of $14.0b of equity and a net outflow of $8.4b of debt.

The financial account surplus decreased $4.7b, from $10.3b in the March quarter 2013 to $5.6b in the June quarter 2013.

Direct investment recorded a net inflow of $13.2b in the June quarter 2013, an increase of $4.3b from the net inflow of $8.9b in the March quarter 2013, where:
  • direct investment assets recorded an inflow of $0.9b, a turnaround of $1.3b on the outflow of $0.3b in the March quarter 2013
  • direct investment liabilities recorded an inflow of $12.3b, an increase of $3.0b on the inflow of $9.3b in the March quarter 2013.

Portfolio investment recorded a net inflow of $13.6b, an increase of $0.3b on the net inflow of $13.4b in the March quarter 2013, where:
  • equity and investment fund shares recorded a net inflow of $6.2b
  • debt securities recorded a net inflow of $7.5b.

Financial derivatives recorded a net outflow of $2.8b, an increase of $0.9b from the net outflow of $1.9b in the March quarter 2013.

Other investment recorded a net outflow of $20.1b, an increase of $12.0b from the net outflow of $8.1b in the March quarter 2013.

Reserve assets recorded a net inflow of $1.6b, a turnaround of $3.6b from the net outflow of $2.0b in the March quarter 2013.


INTERNATIONAL INVESTMENT POSITION


ANALYSIS

Australia's net international investment position at 30 June 2013 was a net foreign liability of $816.9b, down $31.8b on the 31 March 2013 position of $848.7b.

The changes contributing to this result are shown in the following table.

INTERNATIONAL INVESTMENT POSITION, Summary - June Quarter 2013

Net international investment position
Net foreign equity
Net foreign debt
$m
$m
$m

Position at beginning of period
848 698
109 614
739 084
Changes in position reflecting
Transactions
5 572
14 010
-8 438
Price changes
-7 406
-10 173
2 766
Exchange rate changes
-29 180
-58 261
29 082
Other adjustments
-747
-426
-321
Total changes
-31 762
-54 850
23 088
Position at end of period
816 937
54 764
762 173




SUPPLEMENTARY INFORMATION


CONDITIONS

The conditions in the global economy showed moderate increases for most countries in the June quarter 2013. According to the Organisation for Economic Cooperation and Development (OECD), preliminary real GDP estimates in seasonally adjusted terms showed movement in quarterly growth for: China (1.7%), Korea (1.1%), Germany (0.7%), Japan (0.6%), UK (0.6%), France (0.5%), USA (0.4%), Spain (-0.1%), Italy (-0.2%) and Netherlands (-0.2%).

Australia's international investment activities during the quarter were as follows:
  • foreign asset transactions were $5.3b in the June quarter 2013 compared to $3.1b in the March quarter 2013
  • foreign liability transactions were $10.9b in the June quarter 2013 compared to $13.5b in the March quarter 2013.

The Australian share market, as measured by the MSCI global index, decreased 2.9% in the June quarter 2013, compared to the 7.3% increase in the March quarter 2013. There were decreases in: Hong Kong 6.0%, Singapore 5.6%, Canada 4.5%, the UK 3.2%, New Zealand 2.8%, Switzerland 1.7%, Europe ex UK 1.4%, Germany 0.7% and France 0.4%. Market increases were seen in Japan 10.1% and the USA 2.2%. A market price change of $18.7b was recorded for foreign equity assets and -$28.9b in foreign equity liabilities during the June quarter 2013.

According to Bloomberg, the composite corporate benchmark yield increased in Australia from 4.36% to 4.40%, in the UK from 3.30% to 3.74%, in the USA from 2.83% to 3.44%, in Germany from 2.02% to 2.26% and in Japan from 0.51% to 0.62%. The long term 10 year government bond yields increased in the UK from 1.78% to 2.46%, in the USA from 1.87% to 2.52%, in Germany from 1.28% to 1.73% and in Japan from 0.56% to 0.84%. In Australia, the rate increased from 3.51% to 3.54%. Market price changes were recorded for both portfolio debt securities liabilities of -$5.9b and assets of $1.3b in the June quarter 2013.

The Australian dollar depreciated against a number of the major currencies in the June quarter 2013. It decreased 13.5% against Danish krona, 13.0% against the Euro, 12.0% against the Chinese renminbi, 11.9% against Swiss franc, 11.9% against UK pound sterling, 11.0% against US dollar, 8.5% against Canadian dollar and 6.6% against Japanese yen. The Trade Weighted Index (TWI) recorded a decrease of 9.7%. This is reflected in the exchange rate changes for foreign assets of -$87.5b and foreign liabilities of $58.4b.


RELATIONSHIP BETWEEN IPD, EPI AND IPI(footnote 1)

In original terms, the IPD for total goods credits rose 0.2% and the chain Laspeyres price index for goods exports rose 0.7%. The export price index (EPI) fell 0.3% during the June quarter 2013.

In original terms, the IPD for total goods debits fell 0.2% and the chain Laspeyres price index for goods imports fell 0.1%. The import price index (IPI) fell 0.3% during the June quarter 2013.

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. In the June quarter 2013, differences between the IPD and EPI were mainly due to the 'wool and sheepskins', 'meat and meat preparations' and 'coal, coke and briquettes' components.

GOODS AND SERVICES, Price comparison - June Quarter 2013

Changes in
Seasonally adjusted
Original
Implicit price deflators(a)
Implicit price deflators(a)
International Trade price indexes(b)
Chain Laspeyres price indexes(a)
%
%
%
%

Exports
Goods
0.9
0.2
-0.3
0.7
Services
0.7
0.8
na
0.4
Imports
Goods
0.1
-0.2
-0.3
-0.1
Services
3.0
3.0
na
3.0

na not available
(a) Reference year 2010-11
(b) Source: International Trade Price Indexes, Australia (cat. no. 6457.0)

IMPLICIT PRICE DEFLATORS AND INTERNATIONAL TRADE PRICE INDEXES
Graph: IMPLICIT PRICE DEFLATORS AND INTERNATIONAL TRADE PRICE INDEXES



Commodity Price Indexes

The RBA Commodity Price Index(footnote 2) (average monthly index) for rural commodities increased 0.8% between the March quarter 2013 and June quarter 2013 while the EPI for rural goods increased 1.2%.

The RBA Commodity Price Index for non-rural commodities decreased 0.3% while the EPI for non-rural goods total (excluding non-monetary gold) increased 0.1%.

Differences between the RBA Commodity Price Index and ABS price measures are largely a consequence of methodological differences used in the construction of the respective indexes, including coverage of included commodities and timing of source data.


FINANCIAL YEAR 2012-13 SITUATION


CURRENT ACCOUNT

In original terms, the balance on current account for 2012-13 was a deficit of $47.7b, an increase of $7.4b (18%) on the deficit of $40.3b recorded for 2011-12. The balance on goods and services was a deficit of $10.5b, a turnaround of $14.3b on the surplus of $3.8b recorded in 2011-12. Goods and services credits decreased $15.3b (5%) and goods and services debits decreased $1.0b.

The 2012-13 net primary income deficit decreased $6.8b (16%), with a decrease in primary income credits of $0.7b (2%) and a decrease in primary income debits of $7.5b (9%).

The 2012-13 net secondary income deficit decreased $0.1b (9%), with an increase in secondary income credits of $0.1b (1%) and a decrease in secondary income debits of $0.1b (1%).


FINANCIAL ACCOUNT

The balance on financial account recorded a net inflow of $48.2b, with a net inflow on equity of $32.1b and a net inflow on debt of $16.2b. This result was up $8.2b on the net inflow of $40.0b recorded for the previous year as a result of:
  • a decrease of $17.3b on the net outflow on financial derivatives
  • a decrease of $5.1b on the net outflow on reserve assets
  • an increase of $1.6b on the net inflow on direct investment
  • a decrease of $14.1b on the net inflow on portfolio investment
  • an increase of $1.7b on the net outflow on other investment.


INTERNATIONAL INVESTMENT POSITION

Australia's net international investment position as at 30 June 2013 was a net foreign liability of $816.9b. This was down $14.2b (2%) on the position a year earlier as a result of:
  • price changes of -$35.5b
  • exchange rate changes of -$23.9b
  • other changes of -$3.0b
  • net transactions of $48.2b.

During 2012-13, Australia's net foreign equity liability decreased to $54.8b, down $43.2b on the previous financial year, with exchange rate changes of -$46.7b, price changes of -$24.6b and other changes of -$3.9b, partially offset by net transactions of $32.1b.

Australia's net foreign debt liability rose to $762.2b, up $29.0b (4%) on the previous financial year, with exchange rate changes of $22.9b, net transactions of $16.2b and other changes of $0.8b, partially offset by price changes of -$10.9b.

At 30 June 2013, the ratio of Australia's net international investment position to GDP using the latest available GDP figure (for the year ended 31 March 2013 using current prices) was 54.8%. This compares with 56.4% one year ago and 51.5% one decade ago.

1 In this commentary movements in indexes are based on data to four decimal places. <back
2 For RBA Commodity Price Index methodology, see paragraph 23 of the Explanatory Notes. <back

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