5302.0 - Balance of Payments and International Investment Position, Australia, Sep 2018 
Quality Declaration
Quality Declaration ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 04/12/2018
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ANALYSIS AND COMMENTS
In seasonally adjusted current price terms, the September quarter 2018 current account deficit was $10,688m, a fall of $1,368m on the June quarter 2018 deficit. In trend current price terms, the September quarter 2018 current account deficit was $10,170m, a fall of $1,255m on the June 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 September quarter 2018 rose 0.8% to 103.3, with an increase of 3.0% in the implicit price deflator (IPD) for goods and services credits and an increase of 2.2% in the IPD for goods and services debits. In trend terms, the terms of trade for net goods and services rose 0.4% to 103.5. BALANCE ON GOODS AND SERVICES In seasonally adjusted chain volume terms, the balance on goods and services was a surplus of $2,853m, a rise of $1,603m on the June quarter 2018 surplus of $1,250m. The net surplus on goods rose $592m on the June quarter 2018 surplus of $1,644m. Goods credits fell $869m (1%) and goods debits fell $1,461m (2%). The net surplus on services was a turnaround of $1,012m on the June quarter 2018 deficit of $395m. The rise in the balance on goods and services surplus, in seasonally adjusted chain volume terms, is expected to contribute 0.4 percentage points to growth in the September quarter 2018 chain volume measure of GDP, assuming no significant revision to the GDP chain volume estimate for the June quarter 2018. Goods The trend estimate of net goods at current prices for the September quarter 2018 was a surplus of $7,005m, a rise of $1,579m on the June quarter 2018 surplus of $5,426m. In seasonally adjusted terms at current prices, net goods was a surplus of $6,863m, a rise of $2,022m on the June quarter 2018 surplus of $4,841m.
GOODS CREDITS The trend estimate of goods credits at current prices rose $3,094m (4%) to $87,519m in the September quarter 2018. In seasonally adjusted terms at current prices, goods credits rose $2,236m (3%) to $86,934m, with volumes down 1% and prices up 4%. Rural Goods Exports of rural goods, in seasonally adjusted terms at current prices, rose $288m (2%) to $12,380m, with volumes up 1% and prices up 2%. The main components contributing to the rise were:
Partly offsetting these rises was cereal grains and cereal preparations, down $223m (11%), with volumes down 21% and prices up 13%. Non-rural Goods Exports of non-rural goods, in seasonally adjusted terms at current prices, rose $1,983m (3%) to $69,182m, with volumes down 2% and prices up 5%. The main components contributing to the rise were:
Partly offsetting these rises were:
Net Exports of Goods Under Merchanting Net exports of goods under merchanting, in seasonally adjusted terms at current prices, rose $40m to $55m, with prices up 5%. Non-monetary Gold Exports of non-monetary gold, in original and seasonally adjusted terms at current prices, fell $77m (1%) to $5,316m, with volumes up 2% and prices down 3%. GOODS DEBITS The trend estimate of goods debits at current prices rose $1,515m (2%) to $80,514m in the September quarter 2018. In seasonally adjusted terms at current prices, goods debits rose $214m to $80,071m, with volumes down 2% and prices up 2%. Consumption Goods Imports of consumption goods, in seasonally adjusted terms at current prices, fell $191m (1%) to $25,827m, with volumes down 2% and prices up 2%. The main components contributing to the fall were:
Partly offsetting these falls was food and beverages, mainly for consumption, up $84m (2%), with volumes up 2% and prices up 1%. Capital Goods Imports of capital goods, in seasonally adjusted terms at current prices, fell $208m (1%) to $19,172m, with volumes down 2% and prices up 1%. The main components contributing to the fall were:
Partly offsetting these falls was telecommunications equipment, up $107m (3%), with volumes up 4% and prices down 1%. Intermediate and Other Merchandise Goods Imports of intermediate and other merchandise goods, in seasonally adjusted terms at current prices, rose $1,123m (3%) to $33,587m, with prices up 3%. The main components contributing to the rise were:
Partly offsetting these rises was iron and steel, down $112m (11%), with volumes down 15% and prices up 6%. Non-monetary Gold Imports of non-monetary gold, in original and seasonally adjusted terms at current prices, fell $512m (26%) to $1,484m, with volumes down 23% and prices down 4%. SERVICES The trend estimate of net services at current prices was a deficit of $380m, a fall of $429m on the June quarter 2018 deficit of $809m. In seasonally adjusted terms at current prices, net services was a deficit of $256m, a fall of $682m on the June quarter 2018 deficit of $938m.
Services Credits Services credits, in seasonally adjusted terms at current prices, rose $1,155m (5%) to $24,047m, with volumes up 5% and prices up 1%. The main components contributing to the rise were:
In seasonally adjusted terms, tourism related services credits rose $946m (6%) to $16,468m. Services Debits Services debits, in seasonally adjusted terms at current prices, rose $474m (2%) to $24,304m, with prices up 2%. The main components contributing to the rise were:
In seasonally adjusted terms, tourism related services debits rose $237m (2%) to $14,167m. PRIMARY INCOME The trend estimate of the net primary income deficit at current prices rose $718m to $16,503m in the September quarter 2018. In seasonally adjusted terms at current prices, the net primary income deficit rose $1,162m to $16,911m in the September quarter 2018. Primary Income Credits Primary income credits, in seasonally adjusted terms at current prices, rose $517m (3%) to $16,173m. The main component of investment income contributing to the rise was portfolio investment assets, income on equity and investment fund shares, up $494m (9%). Primary Income Debits Primary income debits, in seasonally adjusted terms at current prices, rose $1,679m (5%) to $33,084m. The main component of investment income contributing to the rise was direct investment liabilities, income on equity and investment fund shares, up $1,454m (11%). SECONDARY INCOME The trend estimate of the net secondary income deficit at current prices rose $35m to $292m in the September quarter 2018. In seasonally adjusted terms at current prices, the net secondary income deficit rose $172m to $383m in the September quarter 2018. CAPITAL ACCOUNT In original terms, the capital account deficit was $89m, a decrease of $43m on the June quarter 2018 deficit of $132m. Capital account credits decreased $43m (52%) and capital account debits decreased $86m (40%) in the September quarter 2018. FINANCIAL ACCOUNT The balance on the financial account, in original terms, recorded a net inflow of $11.2b, which was driven by a net inflow of equity of $8.0b and a net inflow of debt of $3.2b. The financial account surplus decreased $2.7b from $13.9b in the June quarter 2018, to $11.2b in the September quarter 2018. Direct Investment Direct investment recorded a net inflow of $5.4b in the September quarter 2018, a decrease of $22.3b on the net inflow of $27.7b in the June quarter 2018, where:
Portfolio Investment Portfolio investment recorded a net outflow of $21.3b in the September quarter 2018, an increase of $21.1b on the net outflow of $0.3b in the June quarter 2018, where:
Financial Derivatives Financial derivatives recorded a net inflow of $2.2b in the September quarter 2018, a turnaround of $5.4b on the net outflow of $3.2b in the June quarter 2018. Other Investment Other investment recorded a net inflow of $23.6b in the September quarter 2018, a turnaround of $35.2b on the net outflow of $11.6b in the June quarter 2018. This was driven by net inflows of $22.6b in loans and net outflows of $3.2b in currency and deposits. Reserve Assets Reserve assets remained steady at an inflow of $1.3b in the September quarter 2018. INTERNATIONAL INVESTMENT POSITION (IIP) Australia's net IIP liability position was $940.2b at 30 September 2018, a decrease of $17.3b on the revised 30 June 2018 position of $957.5b. Australia's net foreign debt liability position increased $12.6b to $1,044.0b. Australia's net foreign equity asset position increased $29.9b to $103.9b at 30 September 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 September 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 (1.6%), Indonesia (1.3%), the USA (0.9%), the UK (0.6%), South Korea (0.6%), Spain (0.6%), France (0.4%), the Euro 28 (0.3%), Germany (-0.2%) and Japan (-0.3%) .
The Australian share market, as measured by the MSCI global index(footnote 3) decreased 0.2% in the September quarter 2018, a turnaround from an increase of 8.3% in the June quarter 2018. Increases were recorded in the USA (7.0%), Indonesia (5.9%), Japan (5.5%), Switzerland (5.4%), Malaysia (5.2%), New Zealand (3.8%), France (3.3%), India (2.9%) and Singapore (0.5%). Decreases were recorded in China (8.6%), Hong Kong (2.0%), the UK (1.5%), Canada (1.5%) and Germany (0.1%). A market price change of -$17.4b was recorded for foreign equity assets and $0.2b for foreign equity liabilities in the September quarter 2018. According to Thomson Reuters(footnote 4) , the composite corporate benchmark yields increased in the USA from 4.07% to 4.11%, the UK from 2.49% to 2.62%, Germany from 1.06% to 1.15%, Japan from 0.31% to 0.38% and Australia from 3.31% to 3.35% in the September quarter 2018. The long-term 10 year government bond yields increased in the USA from 2.85% to 3.05%, the UK from 1.28% to 1.57%, Germany from 0.31% to 0.47% and Japan from 0.03% to 0.13%. The yields decreased in Australia from 2.70% to 2.63% over the September quarter 2018. A market price change of $1.7b was recorded for portfolio debt securities assets and -$5.7b in portfolio debt securities liabilities in the September quarter 2018. The Australian dollar saw mixed movement against major currencies in the September quarter 2018. The Australian dollar depreciated 4.04% against the Swiss franc, 3.75% against the Canadian dollar, 2.89% against the Swedish krona, 2.75% against the South Korean won, 2.55% against the Hong Kong dollar, 2.29% against the US dollar, 2.27% against the European Euro, 2.04% against the UK pound sterling and 2.03% against the Singapore dollar. The dollar appreciated 3.37% against the Indian rupee, 1.68% against the Chinese renminbi, 1.37% against the Indonesian rupiah, 0.53% against the South African rand, 0.17% against the Japanese yen and 0.17% against the New Zealand dollar. The Trade Weighted Index (TWI)(footnote 5) fell 0.64% to 62.20 in the September quarter 2018. These movements were reflected in exchange rate changes for foreign assets of -$27.5b and foreign liabilities of $22.7b in the September quarter 2018. RELATIONSHIP BETWEEN IPD, EPI AND IPI(footnote 6) In original terms, the IPD for total goods credits rose 3.9% and the chain Laspeyres price index for goods exports rose 3.6%. The Export Price Index (EPI)(footnote 7) rose 3.7% during the September quarter 2018. In original terms, the IPD for total goods debits rose 2.1% and the chain Laspeyres price index for goods imports rose 2.1%. The Import Price Index (IPI)(footnote 7) rose 1.9% during the September 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 5.4% between the June quarter 2018 and the September quarter 2018 while the EPI for rural goods rose 3.5%. The RBA Commodity Price Index for non-rural commodities rose 3.1% between the June quarter 2018 and the September quarter 2018 while the EPI for non-rural goods (excluding non-monetary gold) rose 4.3%. 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. FOOTNOTES 1 In this commentary movements in indexes are based on data to four decimal places. <back 2 OECD Statistics Quarterly National Accounts, Organisation for Economic Cooperation and Development – Economic Department, viewed 28 November 2018 <back 3 MSCI Global Market Indexes 2018, Morgan Stanley Capital International, viewed 5 October 2018. <back 4 Thomson Reuters, viewed 3 October 2018. <back 5 Exchange Rates – Daily 2014 to Current, Reserve Bank of Australia - Statistical Tables, viewed 3 October 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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