5302.0 - Balance of Payments and International Investment Position, Australia, Jun 2015 
Quality Declaration
Quality Declaration ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 01/09/2015
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ANALYSIS AND COMMENTS
In seasonally adjusted current price terms, the June quarter 2015 current account deficit was $19,033m, an increase of $5,532m (41%) on the March quarter 2015 deficit. In trend current price terms, the June quarter 2015 current account deficit was $17,103m, an increase of $2,711m (19%) on the March quarter 2015 deficit. The contributors to the current account balances, 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 2015 fell 3.4% to 82.6, with a decrease of 2.7% in the Implicit Price Deflator (IPD) for goods and services credits and an increase of 0.8% in the IPD for goods and services debits. In trend terms, the terms of trade for net goods and services fell 2.5% to 83.2. BALANCE ON GOODS AND SERVICES In seasonally adjusted chain volume terms, the balance on goods and services was a surplus of $5,987m, a fall of $2,334m (28%) on the March quarter 2015 surplus of $8,321m. The net surplus on goods, in seasonally adjusted chain volume terms, fell $2,693m (32%) on the March quarter 2015 surplus of $8,300m. Goods credits fell $2,934m (4%) and goods debits fell $241m. The net surplus on services rose $358m on the March quarter 2015 surplus of $22m. The decrease in the balance on goods and services surplus, in seasonally adjusted chain volume terms, is expected to detract 0.6 percentage points from growth in the June quarter 2015 volume measure of GDP, assuming no significant revision to the GDP chain volume estimate for the March quarter 2015. Goods The trend estimate of net goods at current prices for the June quarter 2015 was a deficit of $6,228m, an increase of $2,551m (69%) on the March quarter 2015 deficit of $3,677m. In seasonally adjusted terms at current prices, net goods was a deficit of $7,877m, an increase of $5,268m (202%) on the March quarter 2015 deficit of $2,609m.
GOODS CREDITS The trend estimate of goods credits at current prices fell $1,295m (2%) to $62,866m in the June quarter 2015. In seasonally adjusted terms at current prices, goods credits fell $4,905m (7%) to $60,957m, with volumes down 4% and prices down 4%. Rural Goods Exports of rural goods, in seasonally adjusted terms at current prices, rose $11m to $11,292m, with volumes down 1% and prices up 1%. The main components contributing to the rise were:
Partly offsetting these rises was other rural, down $234m (5%), with volumes down 6% and prices up 1%. Non-rural Goods Exports of non-rural goods, in seasonally adjusted terms at current prices, fell $3,777m (7%) to $46,613m, with volumes down 3% and prices down 5%. The main components contributing to the fall were:
Partly offsetting these falls was other non-rural (incl. sugar and beverages), up $523m (21%), with volumes up 29% and prices down 6%. Net Exports of Goods Under Merchanting Net exports of goods under merchanting, in seasonally adjusted terms at current prices, fell $13m (12%), with volumes down 6% and prices down 6%. Non-monetary Gold Non-monetary gold, in original and seasonally adjusted terms at current prices, fell $1,126m (28%), with volumes down 28%. GOODS DEBITS The trend estimate of goods debits at current prices rose $1,256m (2%) to $69,094m in the June quarter 2015. In seasonally adjusted terms at current prices, goods debits rose $363m (1%) to $68,834m, with prices up 1%. Consumption Goods Imports of consumption goods, in seasonally adjusted terms at current prices, rose $636m (3%) to $22,643m, with volumes up 4% and prices down 1%. The main components contributing to the rise were:
Partly offsetting these rises was textiles, clothing and footwear, down $166m (4%), with volumes down 5% and prices up 1%. Capital Goods Imports of capital goods, in seasonally adjusted terms at current prices, fell $1,522m (9%) to $15,766m, with volumes down 9% and prices up 1%. The main components contributing to the fall were:
Partly offsetting these falls was industrial transport equipment n.e.s., up $304m (16%), with volumes up 12% and prices up 4%. Intermediate and Other Merchandise Goods Imports of intermediate and other merchandise goods, in seasonally adjusted terms at current prices, rose $1,240m (4%) to $29,411m, with volumes up 1% and prices up 3%. 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 $10m (1%) to $1,014m, with volumes up 2% and prices down 1%. SERVICES The trend estimate of net services at current prices was a deficit of $1,817m, a decrease of $11m (1%) on the March quarter 2015 deficit of $1,828m. In seasonally adjusted terms at current prices, net services was a deficit of $1,764m, a decrease of $408m (19%) on the March quarter 2015 deficit of $2,172m.
Services Credits Services credits, in seasonally adjusted terms at current prices, rose $89m (1%) to $15,983m. The main components contributing to the rise were:
In seasonally adjusted terms, tourism related service credits rose $39m to $10,115m. Services Debits Services debits, in seasonally adjusted terms at current prices, fell $319m (2%) to $17,747m, with volumes down 2%. The main components contributing to the fall were:
In seasonally adjusted terms, tourism related service debits fell $174m (2%) to $8,672m. PRIMARY INCOME The trend estimate of the net primary income deficit at current prices rose $201m (2%) to $8,614m in the June quarter 2015. The seasonally adjusted estimate of the net primary income deficit at current prices rose $715m (9%) to $8,966m in the June quarter 2015. Primary Income Credits Primary income credits, in seasonally adjusted terms at current prices, rose $298m (2%) to $13,362m. The main component contributing to the rise was portfolio investment interest, up $229m (13%). Primary Income Debits Primary income debits, in seasonally adjusted terms at current prices, rose $1,013m (5%) to $22,328m. The main component contributing to the rise was direct investment income on equity and investment fund shares, up $611m (10%) and portfolio investment interest, up $423m (8%). SECONDARY INCOME The trend estimate of the net secondary income deficit at current prices, fell $31m (7%) to $443m in the June quarter 2015. In seasonally adjusted terms, the net secondary income deficit at current prices, fell $44m (9%) to $425m in the June quarter 2015. CAPITAL ACCOUNT In original terms, the capital account deficit was $158m, an increase of $24m (18%) on the March quarter 2015 deficit of $134m. Capital account credits remained steady at $1m and capital account debits rose $24m (18%) in the June quarter 2015. FINANCIAL ACCOUNT The balance on financial account, in original terms, recorded a net inflow of $15.7b, which was driven by a net inflow of equity of $9.7b and a net inflow of debt of $6.1b. The financial account surplus decreased $0.3b to $15.7b in the June quarter 2015, from $16.0b in the March quarter 2015. Direct Investment Direct investment recorded a net inflow of $8.6b in the June quarter 2015, a decrease of $4.9b on the inflow of $13.5b in the March quarter 2015, where:
Portfolio Investment Portfolio investment recorded a net inflow of $18.2b in the June quarter 2015, a decrease of $3.2b on the inflow of $21.4b in the March quarter 2015, where:
Financial Derivatives Financial derivatives recorded a net inflow of $2.8b in the June quarter 2015, a turnaround of $3.6b on the outflow of $0.9b in the March quarter 2015. Other Investment Other investment recorded a net outflow of $20.5b in the June quarter 2015, an increase of $8.1b on the outflow of $12.4b in the March quarter 2015. This was driven by a net outflow in loans of $30.4b, partly offset by a net inflow in currency and deposits of $5.9b. Reserve Assets Reserve assets recorded a net inflow of $6.7b in the June quarter 2015, a turnaround of $12.4b on the outflow of $5.6b in the March quarter 2015. This was contributed by a net inflow of short-term debt securities of $6.2b to the Reserve Bank of Australia (RBA). INTERNATIONAL INVESTMENT POSITION (IIP) Australia's net IIP liability position was $906.0b at 30 June 2015, a decrease of $4.7b (1%) on the 31 March 2015 position of $910.7b. Australia's net foreign debt liability decreased $8.0b (1%) to a net liability position of $976.1b. Australia's net foreign equity decreased $3.3b (5%) to a net asset position of $70.1b at 30 June 2015. The changes contributing to this result are shown in the following table.
SUPPLEMENTARY INFORMATION CONDITIONS The conditions in the global economy showed modest growth for most countries in the June quarter 2015. According to the Organisation for Economic Cooperation and Development,(footnote 2) preliminary real GDP estimates in seasonally adjusted terms showed quarterly growth for Greece (0.8%), UK (0.7%), USA (0.6%), Germany (0.4%), South Korea (0.3%), and European Union (0.3%). Quarterly growth rates fell for Japan (0.4%). Australia's international investment activities during the quarter were as follows:
The Australian share market, as measured by the MSCI global index,(footnote 3) fell 7.6% in the June quarter 2015, following an increase of 9.0% in the March quarter 2015. There were decreases in some major share markets including Germany (10.5%), France (4.9%), Switzerland (4.2%), United Kingdom (3.8%), New Zealand (3.7%), Singapore (3.3%), Canada (2.8%) and USA (0.2%). Increases in share markets were recorded in Japan (5.0%) and Hong Kong (4.5%). A market price change of $32.3b was recorded for foreign equity assets and –$35.7b in foreign equity liabilities in the June quarter 2015. According to Bloomberg,(footnote 4) the composite corporate benchmark yield increased in Australia from 3.13% to 3.57%, in UK from 2.65% to 3.15%, in Germany from 0.99% to 1.48% and in USA from 2.96% to 3.35%. The composite corporate benchmark yield decreased in Japan from 0.35% to 0.34%. The long-term 10 year government bond yields increased in Australia from 2.48% to 2.98%, USA from 1.94% to 2.35%, in UK from 1.58% to 2.01%, in Germany from 0.18% to 0.47% and in Japan from 0.40% to 0.44%. Market price changes were recorded for portfolio debt securities assets of $3.6b and liabilities of –$15.2b in the June quarter 2015. The Australian dollar depreciated against a number of the major currencies in the June quarter 2015. It decreased 5.4% against the UK pound sterling, 3.5% against the Swiss franc, 2.9% against the European euro, 2.7% against the Swedish krona, 1.8% against the Canadian dollar, 1.5% against the Singapore dollar, 1.3% against the Norwegian krone and 0.6% against the US dollar. The Australian dollar appreciated 10.8% against the New Zealand dollar, 4.5% against the Thai baht, 2.5% against the Malaysian ringgit, 2.4% against the Japanese yen and 2.3% against the Indian rupee. The Trade Weighted Index (TWI), (footnote 4) (footnote 5) recorded an increase of 0.8%. This is reflected in exchange rate changes for foreign assets of $2.0b and foreign liabilities of –$2.5b. RELATIONSHIP BETWEEN IPD, EPI AND IPI (footnote 6) In original terms, the IPD for total goods credits fell 3.9% and the chain Laspeyres price index for goods exports fell 4.4%. The Export Price Index (EPI) (footnote 7) fell 4.4% during the June quarter 2015. In original terms, the IPD for total goods debits rose 0.7% and the chain Laspeyres price index for goods imports rose 1.5%. The Import Price Index (IPI) (footnote 7) rose 1.4% during the June quarter 2015. 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 decreased 0.6% between the March and June quarter 2015 while the EPI for rural goods decreased 0.5%. The RBA Commodity Price Index for non-rural commodities decreased 8.0% while the EPI for non-rural goods total (excluding non-monetary gold) decreased 5.5%. 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 2014-15 SITUATION CURRENT ACCOUNT In original terms, the balance on current account for 2014-15 was a deficit of $57.0b, an increase of $5.0b (10%) on the deficit of $52.0b recorded for 2013-14. The balance on goods and services was a deficit of $21.0b, an increase of $13.1b (165%) on the deficit of $7.9b recorded in 2013-14. Goods and services credits decreased $12.3b (4%) and goods and services debits increased $0.9b. The low value threshold adjustments applied to goods debits remained steady at $6.7b for 2014-15 and was $7.0b for 2014. The 2014-15 net primary income deficit decreased $7.9b (19%), with an increase in primary income credits of $4.2b (9%) and a decrease in primary income debits of $3.8b (4%). The 2014-15 net secondary income deficit decreased $0.2b (9%), with an increase in secondary income credits of $0.3b (4%) and an increase in secondary income debits of $0.1b (1%). FINANCIAL ACCOUNT The balance on financial account recorded a net inflow of $58.7b, with a net inflow on equity of $32.2b and a net inflow on debt of $26.5b. This result was an increase of $1.3b on the net inflow of $57.4b recorded for the previous year as a result of:
INTERNATIONAL INVESTMENT POSITION Australia's net international investment position as at 30 June 2015 was a net foreign liability of $906.0b. This was an increase of $21.9b (2%) on the position a year earlier as a result of:
During 2014-15, Australia's net foreign equity increased $64.7b on the previous year, to a net asset position of $70.1b, with exchange rate changes of –$99.9b and other changes of –$19.8b, partly offset by net transactions of $32.2b and price changes of $22.8b. Australia's net foreign debt liability increased of $86.5b (10%) on the previous year, to a net liability position of $976.1b, with exchange rate changes of $58.9b, net transactions of $26.5b, other changes of $7.8b, partly offset by price changes of –$6.6b. At 30 June 2015, the ratio of Australia's net international investment position to GDP using the latest available GDP figure (for the year ended 31 March 2015 using current prices) was 56.9%. This compares with 55.9% 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 2015. <back 3 MSCI Global Market Indexes 2015, Morgan Stanley Capital International, viewed 7 July 2015. <back 4 Bloomberg, Bloomberg Professional Service, viewed 9 July 2015. <back 5 Exchange Rates – Daily 2015 to Current, Reserve Bank of Australia – Statistical Tables, viewed 9 July 2015. <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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