5302.0 - Balance of Payments and International Investment Position, Australia, Jun 2018 
Quality Declaration
Quality Declaration ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 04/09/2018
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ANALYSIS AND COMMENTS
In seasonally adjusted current price terms, the June quarter 2018 current account deficit was $13,472m, a rise of $1,794m on the March quarter 2018 deficit. In trend current price terms, the June quarter 2018 current account deficit was $12,875m, a fall of $817m on the March quarter 2018 deficit. The contributors to the current account balance, in seasonally adjusted and trend terms at current prices, are shown in the following table.
TERMS OF TRADE(footnote 1) Australia's seasonally adjusted terms of trade on net goods and services for the June quarter 2018 fell 1.3% to 117.6, with an increase of 1.4% in the implicit price deflator (IPD) for goods and services credits and an increase of 2.7% in the IPD for goods and services debits. In trend terms, the terms of trade for net goods and services rose 1.0% to 118.6. BALANCE ON GOODS AND SERVICES In seasonally adjusted chain volume terms, the balance on goods and services was a deficit of $12,861m, a fall of $546m on the March quarter 2018 deficit of $13,407m. The net deficit on goods rose $597m on the March quarter 2018 deficit of $10,496m. Goods credits rose $753m (1%) and goods debits rose $1,350m (2%). The net deficit on services fell $1,142m on the March quarter 2018 deficit of $2,911m. The fall in the balance on goods and services deficit, in seasonally adjusted chain volume terms, is expected to contribute 0.1 percentage points to growth in the June quarter 2018 chain volume measure of GDP, assuming no significant revision to the GDP chain volume estimate for the March quarter 2018. Goods The trend estimate of net goods at current prices for the June quarter 2018 was a surplus of $4,500m, a rise of $1,152m on the March quarter 2018 surplus of $3,348m. In seasonally adjusted terms at current prices, net goods was a surplus of $3,981m, a fall of $1,261m on the March quarter 2018 surplus of $5,242m.
GOODS CREDITS The trend estimate of goods credits at current prices rose $3,951m (5%) to $84,433m in the June quarter 2018. In seasonally adjusted terms at current prices, goods credits rose $2,341m (3%) to $84,557m, with volumes up 1% and prices up 2%. Rural Goods Exports of rural goods, in seasonally adjusted terms at current prices, rose $813m (7%) to $12,050m, with volumes up 4% and prices up 3%. The main components contributing to the rise were:
Non-rural Goods Exports of non-rural goods, in seasonally adjusted terms at current prices, rose $1,856m (3%) to $67,117m, with volumes up 1% and prices up 1%. The main components contributing to the rise were:
Net Exports of Goods Under Merchanting Net exports of goods under merchanting, in seasonally adjusted terms at current prices, rose $9m to $12m. Non-monetary Gold Exports of non-monetary gold, in original and seasonally adjusted terms at current prices, fell $337m (6%) to $5,378m, with volumes down 7% and prices up 2%. GOODS DEBITS The trend estimate of goods debits at current prices rose $2,799m (4%) to $79,933m in the June quarter 2018. In seasonally adjusted terms at current prices, goods debits rose $3,603m (5%) to $80,576m, with volumes up 2% and prices up 3%. Consumption Goods Imports of consumption goods, in seasonally adjusted terms at current prices, rose $727m (3%) to $26,568m, with volumes up 2% and prices up 1%. The main components contributing to the rise were:
Partly offsetting these rises was non-industrial transport equipment, down $116m (2%), with volumes down 3% and prices up 2%. Capital Goods Imports of capital goods, in seasonally adjusted terms at current prices, rose $1,019m (5%) to $19,585m, with volumes up 4% and prices up 1%. The main components contributing to the rise were:
Partly offsetting these rises was civil aircraft and confidentialised items, down $201m (13%), with volumes down 16% and prices up 4%. Intermediate and Other Merchandise Goods Imports of intermediate and other merchandise goods, in seasonally adjusted terms at current prices, rose $1,463m (5%) to $32,427m, with volumes down 1% and prices up 6%. The main components contributing to the rise were:
Non-monetary Gold Imports of non-monetary gold, in original and seasonally adjusted terms at current prices, rose $394m (25%) to $1,996m, with volumes up 22% and prices up 2%. SERVICES The trend estimate of net services at current prices was a deficit of $1,540m, a fall of $113m on the March quarter 2018 deficit of $1,653m. In seasonally adjusted terms at current prices, net services was a deficit of $1,169m, a fall of $729m on the March quarter 2018 deficit of $1,898m.
Services Credits Services credits, in seasonally adjusted terms at current prices, rose $337m (2%) to $21,750m, with volumes up 1%. The main component contributing to the rise was travel, up $308m (2%), with volumes up 2%. In seasonally adjusted terms, tourism related services credits rose $307m (2%) to $14,743m. Services Debits Services debits, in seasonally adjusted terms at current prices, fell $393m (2%) to $22,919m, with volumes down 4% and prices up 2%. The main components contributing to the fall were:
Partly offsetting these falls was other services, up $89m (1%), with volumes down 1% and prices up 2%. In seasonally adjusted terms, tourism related services debits fell $497m (4%) to $12,967m. PRIMARY INCOME The trend estimate of the net primary income deficit at current prices rose $455m to $15,555m in the June quarter 2018. In seasonally adjusted terms at current prices, the net primary income deficit rose $1,102m to $15,934m in the June quarter 2018. Primary Income Credits Primary income credits, in seasonally adjusted terms at current prices, rose $891m (6%) to $15,655m. The main component of investment income contributing to the rise was direct investment assets, income on equity and investment fund shares, up $324m (7%). Primary Income Debits Primary income debits, in seasonally adjusted terms at current prices, rose $1,993m (7%) to $31,589m. The main component of investment income contributing to the rise was direct investment liabilities, income on equity and investment fund shares, up $715m (6%). SECONDARY INCOME The trend estimate of the net secondary income deficit at current prices fell $7m to $280m in the June quarter 2018. In seasonally adjusted terms at current prices, the net secondary income deficit rose $161m to $351m in the June quarter 2018. CAPITAL ACCOUNT In original terms, the capital account deficit was $143m, an increase of $123m on the March quarter 2018 deficit of $20m. Capital account credits decreased $100m (80%) and capital account debits increased $23m (16%) in the June quarter 2018. FINANCIAL ACCOUNT The balance on the financial account, in original terms, recorded a net inflow of $12.7b, which was driven by a net inflow of equity of $17.6b and a net outflow of debt of $5.0b. The financial account surplus increased $5.6b from $7.1b in the March quarter 2018, to $12.7b in the June quarter 2018. Direct Investment Direct investment recorded a net inflow of $27.2b in the June quarter 2018, an increase of $12.2b on the net inflow of $15.0b in the March quarter 2018, where:
Portfolio Investment Portfolio investment recorded a net outflow of $1.6b in the June quarter 2018, a turnaround of $4.2b on the net inflow of $2.6b in the March quarter 2018, where:
Financial Derivatives Financial derivatives recorded a net outflow of $3.2b in the June quarter 2018, a turnaround of $10.0b on the net inflow of $6.7b in the March quarter 2018. Other Investment Other investment recorded a net outflow of $11.0b in the June quarter 2018, a decrease of $16.7b on the net outflow of $27.7b in the March quarter 2018. This was driven by net outflows of $8.4b in loans and $1.3b in currency and deposits. Reserve Assets Reserve assets recorded an inflow of $1.3b in the June quarter 2018, a decrease of $9.2b on the inflow of $10.4b in the March quarter 2018. INTERNATIONAL INVESTMENT POSITION (IIP) Australia's net IIP liability position was $953.4b at 30 June 2018, an increase of $19.5b on the revised 31 March 2018 position of $933.9b. Australia's net foreign debt liability increased $15.3b to $1,036.4b. Australia's net foreign equity asset decreased $4.2b to $83.0b at 30 June 2018. The changes contributing to this result are shown in the following table.
SUPPLEMENTARY INFORMATION CONDITIONS The conditions in the global economy showed improving growth in Australia’s major trading partner countries in the June quarter 2018. 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 (1.8%), Indonesia (1.3%), the USA (1.0%), Japan (0.5%), Germany (0.5%), the Euro 28 (0.4%), the UK (0.4%) and France (0.2%).
The Australian share market, as measured by the MSCI global index(footnote 3) increased 8.3% in the June quarter 2018, following a decrease of 5.5% in the March quarter 2018. Increases were recorded in New Zealand (12.4%), the UK (8.0%), Canada (6.2%), the USA (3.1%), France (3.1%) and Japan (1.0%). Decreases were recorded in Singapore (5.7%), China (4.3%), Hong Kong (2.5%), Germany (0.8%) and Switzerland (0.6%). A market price change of -$48.5b was recorded for foreign equity assets and $41.5b for foreign equity liabilities in the June quarter 2018. According to Thomson Reuters (footnote 4) the composite corporate benchmark yields increased in the USA from 3.82% to 4.07%, Germany from 1.00% to 1.06%, Japan from 0.29% to 0.31% and Australia from 3.23% to 3.31%. The yields in the UK remained unchanged at 2.49% over the June quarter 2018. The long-term 10 year government bond yields increased in the USA from 2.74% to 2.85%.The yields decreased in Germany from 0.50% to 0.31%, Australia from 2.72% to 2.70%, in the UK from 1.35% to 1.28% and Japan from 0.04% to 0.03% over the June quarter 2018. A market price change of $2.5b was recorded for portfolio debt securities assets and -$5.2b in portfolio debt securities liabilities in the June quarter 2018. The Australian dollar appreciated against most major currencies in the June quarter 2018. The dollar appreciated 3.49% against the UK pound sterling, 2.41% against the New Zealand dollar, 2.04% against the European Euro, 1.44% against the Indian rupee, 1.33% against the Chinese renminbi, 0.27% against the Singapore dollar and 0.26% against the Japanese yen. The Australian dollar depreciated 3.58% against the Hong Kong dollar, 3.57% against the US dollar and 1.31% against the Canadian dollar. The Trade Weighted Index (TWI)(footnote 5) rose 0.48% to 62.60 in the June quarter 2018. These movements were reflected in exchange rate changes for foreign assets of -$16.1b and foreign liabilities of $29.0b in the June quarter 2018. RELATIONSHIP BETWEEN IPD, EPI AND IPI (footnote 6) In original terms, the IPD for total goods credits rose 1.5% and the chain Laspeyres price index for goods exports rose 1.8%. The Export Price Index (EPI)(footnote 7) rose 1.9% during the June quarter 2018. In original terms, the IPD for total goods debits rose 2.8% and the chain Laspeyres price index for goods imports rose 3.2%. The Import Price Index (IPI)(footnote 7) rose 3.2% during the June quarter 2018. 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.
Commodity Price Indexes The RBA Commodity Price Index (average monthly index) for rural commodities rose 4.0% between the March quarter 2018 and the June quarter 2018 while the EPI for rural goods rose 3.0%. The RBA Commodity Price Index for non-rural commodities rose 0.4% between the March quarter 2018 and the June quarter 2018 while the EPI for non-rural goods (excluding non-monetary gold) rose 1.7%. 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 2017-18 SITUATION CURRENT ACCOUNT In original terms, the balance on current account for 2017-18 was a deficit of $54.1b, a rise of $15.3b on the deficit of $38.8b recorded for 2016-17. The balance on goods and services was a surplus of $6.2b, a fall of $4.7b on the surplus of $10.9b recorded for 2016-17. Goods and services credits rose $27.3b (7%) and goods and services debits rose $32.0b (9%). The low value threshold adjustments applied to goods debits for 2017-18, rose $1.9b to $11.1b. The 2017-18 net primary income deficit rose $11.1b, with a rise in primary income credits of $2.8b (5%) and a rise in primary income debits of $13.9b (14%). The 2017-18 net secondary income deficit fell $0.5b, with a rise in secondary income credits of $0.3b (3%) and a fall in secondary income debits of $0.2b (2%). FINANCIAL ACCOUNT The balance on financial account recorded a net inflow of $52.8b, with a net inflow on equity of $18.0b and a net inflow on debt of $34.8b. This result was an increase of $19.5b on the net inflow of $33.3b recorded for the previous financial year as a result of:
INTERNATIONAL INVESTMENT POSITION Australia's net international investment position as at 30 June 2018 was a net foreign liability of $953.4b. This was an increase of $22.9b on the position a year earlier as a result of:
During 2017-18, Australia's net foreign equity asset increased to $83.0b, an increase of $48.2b on the previous financial year, with exchange rate changes of $30.0b, price changes of $16.9b, and other changes of $19.2b, offset by net transactions of $18.0b. Australia's net foreign debt liability increased to $1,036.4b, an increase of $71.1b on the previous financial year, with net transactions of $34.8b, exchange rate changes of $22.2b, other changes of $7.7b and price changes of $6.3b. At 30 June 2018, the ratio of Australia's net international investment position to GDP using the latest available GDP figure (for the year ended 31 March 2018 using current prices) was 52.5%. This compares with 52.9% one year ago. 1 In this commentary movements in indexes are based on data to four decimal places. <back 2 OECD Statistics Quarterly National Account, Organisation for Economic Cooperation and Development – Economic Department, viewed 21 August 2018 <back 3 MSCI Global Market Indexes 2018, Morgan Stanley Capital International, viewed 6 July 2018. <back 4 Thomson Reuters, viewed 17 July 2018. <back 5 Exchange Rates – Daily 2014 to Current, Reserve Bank of Australia - Statistical Tables, viewed 3 July 2018. <back 6 In this commentary movements in indexes are based on data to four decimal places. <back 7 Source: International Trade Price Indexes, Australia (cat. no. 6457.0) <back Document Selection These documents will be presented in a new window.
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