5302.0 - Balance of Payments and International Investment Position, Australia, Sep 2017 
Quality Declaration
Quality Declaration ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 05/12/2017
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ANALYSIS AND COMMENTS
In seasonally adjusted current price terms, the September quarter 2017 current account deficit was $9,125m, a fall of $539m on the June quarter 2017 deficit. In trend current price terms, the September quarter 2017 current account deficit was $9,552m, a rise of $1,851m on the June quarter 2017 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 September quarter 2017 fell 0.4% to 114.7, with a decrease of 2.1% in the implicit price deflator (IPD) for goods and services credits and a decrease of 1.6% in the IPD for goods and services debits. In trend terms, the terms of trade for net goods and services fell 2.1% to 115.5. BALANCE ON GOODS AND SERVICES In seasonally adjusted chain volume terms, the balance on goods and services was a deficit of $9,737m, a rise of $145m on the June quarter 2017 deficit of $9,592m. The net deficit on goods fell $19m on the June quarter 2017 deficit of $8,320m. Goods credits rose $1,344m (2%) and goods debits rose $1,326m (2%). The net deficit on services rose $164m on the June quarter 2017 deficit of $1,272m. The rise in the balance on goods and services deficit, in seasonally adjusted chain volume terms, is expected to make no contribution to growth in the September quarter 2017 volume measure of GDP, assuming no significant revision to the GDP chain volume estimate for the June quarter 2017. Goods The trend estimate of net goods at current prices for the September quarter 2017 was a surplus of $3,284m, a fall of $2,016m on the June quarter 2017 surplus of $5,300m. In seasonally adjusted terms at current prices, net goods was a surplus of $3,039m, a fall of $702m on the June quarter 2017 surplus of $3,741m.
GOODS CREDITS The trend estimate of goods credits at current prices fell $1,476m (2%) to $75,460m in the September quarter 2017. In seasonally adjusted terms at current prices, goods credits fell $520m (1%) to $74,716m, with volumes up 2% and prices down 3%. Rural Goods Exports of rural goods, in seasonally adjusted terms at current prices, rose $275m (2%) to $12,547m, with volumes up 3% and prices down 1%. The main components contributing to the rise were:
Partly offsetting these rises was cereal grains and cereal preparations, down $345m (14%) with volumes down 15% and prices up 2%. Non-rural Goods Exports of non-rural goods, in seasonally adjusted terms at current prices, fell $244m to $57,653m, with volumes up 3% and prices down 3%. The main components contributing to the fall were:
Partly offsetting these falls was metal ores and minerals, up $352m (2%), with volumes up 4% and prices down 2%. Net Exports of Goods Under Merchanting Net exports of goods under merchanting, in seasonally adjusted terms at current prices, fell $16m (10%), with volumes down 9% and prices down 2%. Non-monetary Gold Non-monetary gold, in original and seasonally adjusted terms at current prices, fell $535m (11%), with volumes down 8% and prices down 3%. GOODS DEBITS The trend estimate of goods debits at current prices rose $541m (1%) to $72,177m in the September quarter 2017. In seasonally adjusted terms at current prices, goods debits rose $181m to $71,676m, with volumes up 2% and prices down 2%. Consumption Goods Imports of consumption goods, in seasonally adjusted terms at current prices, fell $558m (2%) to $24,334m, with volumes down 1% and prices down 1%. The main components contributing to the fall were:
Capital Goods Imports of capital goods, in seasonally adjusted terms at current prices, rose $584m (3%) to $18,498m, with volumes up 7% and prices down 3%. The main components contributing to the rise were:
Intermediate and Other Merchandise Goods Imports of intermediate and other merchandise goods, in seasonally adjusted terms at current prices, rose $141m (1%) to $27,551m, with volumes up 1% and prices down 1%. 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 $14m (1%), with volumes up 5% and prices down 3%. SERVICES The trend estimate of net services at current prices was a deficit of $61m, a fall of $233m on the June quarter 2017 deficit of $294m. In seasonally adjusted terms at current prices, net services was a surplus of $17m, a turnaround of $327m on the June quarter 2017 deficit of $310m.
Services Credits Services credits, in seasonally adjusted terms at current prices, rose $366m (2%) to $21,950m, with volumes up 2%. The main components contributing to the rise were:
In seasonally adjusted terms, tourism related services credits rose $310m (2%) to $15,011m. Services Debits Services debits, in seasonally adjusted terms at current prices, rose $40m to $21,933m, with volumes up 2% and prices down 2%. The main components contributing to the rise were:
Partly offsetting these rises was travel, down $120m (1%) with volumes up 1% and prices down 2%. In seasonally adjusted terms, tourism related services debits fell $99m (1%) to $12,456m. PRIMARY INCOME The trend estimate of the net primary income deficit at current prices rose $52m to $12,587m in the September quarter 2017. In seasonally adjusted terms at current prices, the net primary income deficit fell $1,044m to $11,968m in the September quarter 2017. Primary Income Credits Primary income credits, in seasonally adjusted terms at current prices, rose $821m (6%) to $14,873m. The main component contributing to the rise was direct investment assets, income on equity and investment fund shares, up $612m (12%). Primary Income Debits Primary income debits, in seasonally adjusted terms at current prices, fell $223m (1%) to $26,841m. The main component contributing to the fall was direct investment liabilities, income on equity and investment fund shares, down $262m (2%). SECONDARY INCOME The trend estimate of the net secondary income deficit at current prices rose $16m to $188m in the September quarter 2017. In seasonally adjusted terms at current prices, the net secondary income deficit rose $129m to $213m in the September quarter 2017. CAPITAL ACCOUNT In original terms, the capital account deficit was $117m, a turnaround of $288m on the June quarter 2017 surplus of $171m. Capital account credits decreased $328m (96%) and capital account debits decreased $40m (24%) in the September quarter 2017. FINANCIAL ACCOUNT The balance on the financial account, in original terms, recorded a net inflow of $14.2b, which was driven by a net outflow of equity of $6.7b and a net inflow of debt of $20.9b. The financial account surplus increased $3.6b (34%) from $10.6b to $14.2b in the September quarter 2017. Direct Investment Direct investment recorded a net inflow of $6.9b in the September quarter 2017, a decrease of $22.1b on the net inflow of $29.0b in the June quarter 2017, where:
Portfolio Investment Portfolio investment recorded a net outflow of $0.9b in the September quarter 2017, a turnaround of $4.4b on the net inflow of $3.5b in the June quarter 2017, where:
Financial Derivatives Financial derivatives recorded a net outflow of $5.6b in the September quarter 2017, an increase of $5.0b on the net outflow of $0.6b in the June quarter 2017. Other Investment Other investment recorded a net inflow of $3.7b in the September quarter 2017, a turnaround of $19.6b on the net outflow of $15.9b in the June quarter 2017. This was driven by net inflows of $9.6b in loans, offset by net outflows of $4.7b in currency and deposits. Reserve Assets Reserve assets recorded an inflow of $10.1b in the September quarter 2017, a turnaround of $15.5b on the outflow of $5.4b in the June quarter 2017. INTERNATIONAL INVESTMENT POSITION (IIP) Australia's net IIP liability position was $958.8b at 30 September 2017, an increase of $13.2b (1%) on the revised 30 June 2017 position of $945.7b. Australia's net foreign debt liability increased $26.0b (3%) to $989.7b. Australia's net foreign equity asset increased $12.8b (71%) to $30.8b at 30 September 2017. The changes contributing to this result are shown in the following table.
SUPPLEMENTARY INFORMATION CONDITIONS The conditions in the global economy showed modest growth in Australia’s major trading partner countries in the September quarter 2017. 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 (1.7%), South Korea (1.4%), Indonesia (1.2%), the USA (0.8%), the Euro 28 (0.6%), France (0.5%), the UK (0.4%) and Japan (0.3%).
The Australian share market, as measured by the MSCI global index(footnote 3) decreased 0.5% in the September quarter 2017, following a decrease of 3.3% in the June quarter 2017. Increases were recorded in Hong Kong and France (4.4%), the USA and Germany (3.9%), Canada and Japan (3.4%), Switzerland (2.9%), the UK (0.8%) and Singapore (0.2%). Decreases were recorded in New Zealand (1.0%). A market price change of -$15.5b was recorded for foreign equity assets and -$2.0b in foreign equity liabilities in the September quarter 2017. According to Bloomberg(footnote 4), the composite corporate benchmark yields increased in the UK from 2.24% to 2.31% and Australia from 3.27% to 3.31%. The yields decreased in Germany from 1.03% to 0.89%, the USA from 3.25% to 3.21% and Japan from 0.31% to 0.29%. The long-term 10 year government bond yields increased in Australia from 2.41% to 2.70%, the UK from 1.26% to 1.37% and the USA from 2.31% to 2.33%.The yields decreased in Japan from 0.09% to 0.06% and Germany from 0.47% to 0.46% over the September Quarter 2017. A market price change of $2.7b was recorded for portfolio debt securities assets and -$3.4b in portfolio debt securities liabilities in the September quarter 2017. The Australian dollar saw mixed movements against major currencies in the September quarter 2017. The dollar appreciated 3.53% against the New Zealand dollar, 3.44% against the Swiss franc, 3.03% against the Indonesian rupiah and the Indian rupee, 2.51% against the Japanese yen, 2.03% against the South Korean won, 2.00% against the Hong Kong dollar, 1.91% against the US dollar, 1.75% against the New Taiwan dollar, 0.56% against the Chinese renminbi, 0.51% against the Singapore dollar, 0.33% against the Malaysian ringgit and 0.08% against the Thai baht. It depreciated 2.35% against the Canadian dollar, 1.15% against the UK pound sterling and 1.07% against the European euro. The Trade Weighted Index (TWI) ((footnote 4),(footnote 5)) rose by 1.07% to 66.20 in the September quarter 2017. These movements were reflected in exchange rate changes for foreign assets of $25.9b and foreign liabilities of -$7.4b in the September quarter 2017. RELATIONSHIP BETWEEN IPD, EPI AND IPI(footnote 6) In original terms, the IPD for total goods credits fell 2.6% and the chain Laspeyres price index for goods exports fell 3.5%. The Export Price Index (EPI)(footnote 7)fell 3.0% during the September quarter 2017. In original terms, the IPD for total goods debits fell 1.5% and the chain Laspeyres price index for goods imports fell 1.4%. The Import Price Index (IPI)(footnote 7) fell 1.6% during the September quarter 2017. 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 6.0% between the June quarter 2017 and the September quarter 2017 while the EPI for rural goods decreased 1.3%. The RBA Commodity Price Index for non-rural commodities decreased 3.0% between the June quarter 2017 and the September June quarter 2017 while the EPI for non-rural goods total (excluding non-monetary gold) decreased 3.2%. 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. 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 17 November 2017. <back 3 MSCI Global Market Indexes 2016, Morgan Stanley Capital International, viewed 3 October 2017. <back 4 Bloomberg, Bloomberg Professional Service, viewed 5 October 2017. <back 5 Exchange Rates – Daily 2014 to Current, Reserve Bank of Australia - Statistical Tables, viewed 4 October 2017. <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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