5302.0 - Balance of Payments and International Investment Position, Australia, Dec 2015 
Quality Declaration
Quality Declaration ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 01/03/2016
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ANALYSIS AND COMMENTS
In seasonally adjusted current price terms, the December quarter 2015 current account deficit was $21,106m, an increase of $2,258m (12%) on the September quarter 2015 deficit. In trend current price terms, the December quarter 2015 current account deficit was $21,593m, an increase of $1,295m (6%) on the September 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 December quarter 2015 fell 3.2% to 80.6, with a decrease of 3.7% in the implicit price deflator (IPD) for goods and services credits and a decrease of 0.5% in the IPD for goods and services debits. In trend terms, the terms of trade for net goods and services fell 3.0% to 80.5. BALANCE ON GOODS AND SERVICES In seasonally adjusted chain volume terms, the balance on goods and services was a surplus of $8,510m, an increase of $19m on the September quarter 2015 surplus of $8,491m. The net surplus on goods decreased $89m (1%) on the September quarter 2015 surplus of $8,197m. Goods credits rose $258m and goods debits rose $347m (1%). The net surplus on services increased $107m (36%) on the September quarter 2015 surplus of $294m. The increase in the balance on goods and services surplus, in seasonally adjusted chain volume terms, is expected to contribute 0.0 percentage points to growth in the December quarter 2015 volume measure of GDP, assuming no significant revision to the GDP chain volume estimate for the September quarter 2015. Goods The trend estimate of net goods at current prices for the December quarter 2015 was a deficit of $8,720m, an increase of $1,145m (15%) on the September quarter 2015 deficit of $7,575m. In seasonally adjusted terms at current prices, net goods was a deficit of $8,465m, an increase of $2,725m (47%) on the September quarter 2015 deficit of $5,740m.
GOODS CREDITS The trend estimate of goods credits at current prices fell $885m (1%) to $61,082m in the December quarter 2015. In seasonally adjusted terms at current prices, goods credits fell $2,901m (5%) to $61,048m, with prices down 5%. Rural Goods Exports of rural goods, in seasonally adjusted terms at current prices, rose $526m (5%) to $11,639m, with volumes up 10% and prices down 5%. The main component contributing to the rise was other rural, up $975m (21%), with volumes up 22%. Partly offsetting this rise were:
Non-rural Goods Exports of non-rural goods, in seasonally adjusted terms at current prices, fell $2,662m (6%) to $45,507m, with prices down 6%. The main components contributing to the fall were:
Partly offsetting these falls was other mineral fuels, up $377m (6%), with volumes up 14% and prices down 7%. Net Exports of Goods Under Merchanting Net exports of goods under merchanting, in seasonally adjusted terms at current prices, fell $51m (55%), with volumes down 51% and prices down 8%. Non-monetary Gold Non-monetary gold, in original and seasonally adjusted terms at current prices, fell $714m (16%), with volumes down 15% and prices down 1%. GOODS DEBITS The trend estimate of goods debits at current prices rose $260m to $69,802m in the December quarter 2015. In seasonally adjusted terms at current prices, goods debits fell $176m to $69,513m, with volumes up 1% and prices down 1%. Consumption Goods Imports of consumption goods, in seasonally adjusted terms at current prices fell $47m, with volumes down 2% and prices up 2%. The main components contributing to the fall were:
Partly offsetting these falls was textiles, clothing and footwear, up $137m (3%), with volumes up 1% and prices up 2%. Capital Goods Imports of capital goods, in seasonally adjusted terms at current prices fell $164m (1%) to $16,661m, with volumes down 1%. The main components contributing to the fall were:
Partly offsetting these falls were:
Intermediate and Other Merchandise Goods Imports of intermediate and other merchandise goods, in seasonally adjusted terms at current prices rose $125m to $27,575m, with volumes up 4% and prices down 3%. The main components contributing to the rise were:
Party offsetting these rises were:
Non-monetary Gold Imports of non-monetary gold, in original and seasonally adjusted terms at current prices, fell $89m (7%), with volumes down 7% and prices down 1%. SERVICES The trend estimate of net services at current prices was a deficit of $1,440m, a decrease of $378m (21%) on the September quarter 2015 deficit of $1,818m. In seasonally adjusted terms at current prices, net services was a deficit of $1,464m, a decrease of $133m (8%) on the September quarter 2015 deficit of $1,597m.
Services Credits Services credits, in seasonally adjusted terms at current prices, rose $351m (2%) to $17,171m, with volumes up 2%. The main components contributing to the rise were:
Partly offsetting these rises was other services, down $124m (2%), with volumes down 2%. In seasonally adjusted terms, tourism related services credits rose $495m (5%) to $11,090m. Services Debits Services debits, in seasonally adjusted terms at current prices, rose $219m (1%) to $18,636m, with volumes up 1%. The main component contributing to the rise was transport, up $272m (6%) with volumes up 5% and prices up 2%. Partly offsetting this rise was other services, down $125m (2%), with volumes down 2%. In seasonally adjusted terms, tourism related services debits rose $47m (1%) to $9,209m. PRIMARY INCOME The trend estimate of the net primary income deficit at current prices increased $522m (5%) to $10,815m in the December quarter 2015. The seasonally adjusted estimate of the net primary income deficit at current prices decreased $331m (3%) to $10,564m in the December quarter 2015. Primary Income Credits Primary income credits, in seasonally adjusted terms at current prices, increased $683m (6%) to $12,902m. The main component contributing to this increase was direct investment assets, income on equity and investment fund shares, which increased $297m (7%). Primary Income Debits Primary income debits, in seasonally adjusted terms at current prices, increased $352m (2%) to $23,466m. The main component contributing to this increase was investment income, direct investment liabilities, income on equity and investment fund shares, which increased $265m (4%). SECONDARY INCOME The trend estimate of the net secondary income deficit at current prices increased $5m (1%) to $617m in the December quarter 2015. In seasonally adjusted terms, the net secondary income deficit at current prices decreased $3m to $613m in the December quarter 2015. CAPITAL ACCOUNT In original terms, the capital account deficit was $128m, an increase of $7m (6%) on the September quarter 2015 deficit of $121m. Capital account credits fell $4m (100%) and capital account debits rose $3m (2%) in the December quarter 2015. FINANCIAL ACCOUNT The balance of the financial account, in original terms, recorded a net inflow of $21.0b, which was driven by a net inflow of debt of $16.3b and a net inflow of equity of $4.7b. The financial account surplus decreased $0.6b to $21.0b in the December quarter 2015, from $21.6b in the September quarter 2015. Direct Investment Direct investment recorded a net inflow of $27.3b in the December quarter 2015, an increase of $19.5b on the inflow of $7.9b in the September quarter 2015, where:
Portfolio Investment Portfolio investment recorded a net inflow of $8.1b in the December quarter 2015, a decrease of $3.0b on the inflow of $11.1b in the September quarter 2015, where:
Financial Derivatives Financial derivatives recorded a net outflow of $0.1b in the December quarter 2015, a decrease of $1.0b on the outflow of $1.0b in the September quarter 2015. Other Investment Other investment recorded a net outflow of $15.2b in the December quarter 2015, a turnaround of $17.8b on the inflow of $2.6b in the September quarter 2015. This was driven by a net outflow of loans of $14.4b and by a net outflow in currency and deposits of $2.8b. Reserve Assets Reserve assets recorded a net inflow of $0.9b in the December quarter 2015, a decrease of $0.2b on the inflow of $1.2b in the September quarter 2015. INTERNATIONAL INVESTMENT POSITION (IIP) Australia's net IIP liability position was $943.6b at 31 December 2015, an increase of $19.2b (2%) on the revised 30 September 2015 position of $924.5b. Australia's net foreign debt liability increased $2.8b to a net liability position of $1,005.6b. Australia's net foreign equity asset decreased $16.4b (21%) to a net asset position of $61.9b at 31 December 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 December quarter 2015. Growth in the US and the EU improved, while growth in Asia (including China and Japan) was weaker than expected. According to the Organisation for Economic Cooperation and Development (OECD)(footnote 2) , preliminary growth rate compared to last quarter in seasonally adjusted terms showed quarterly growth for China (1.6%), Indonesia (1.3%), Spain (0.8%), South Korea (0.6%), UK (0.5%), France (0.2%), Germany (0.3%), Euro area (0.3%), Netherlands (0.3%) and Italy (0.1%). Preliminary growth rates fell for Japan (0.4%) and Greece (0.6%).
The Australian share market, as measured by the MSCI global index(footnote 3) , increased by 7.4% in the December quarter 2015, following a decrease of -10.7% in the September quarter 2015. Increases were recorded in Germany (13.1%), Japan (12.6%), New Zealand (10.0%), USA (8.3%), France (7.0%), Switzerland (6.9%), Hong Kong (6.8%), UK (5.4%), Singapore (3.7%) and Canada (0.0%). No decreases were recorded. A market price change of -$38.8b was recorded for foreign equity assets and $20.0b in foreign equity liabilities in the December quarter 2015. According to Bloomberg(footnote 4) , the composite corporate benchmark yield increased in the UK from 3.16% to 3.23%, the USA from 3.45% to 3.70% and decreased in Germany from 1.58% to 1.45%, Japan from 0.34% to 0.31%. In Australia, the rate increased from 3.45% to 3.78%. The long-term 10 year government bond yields increased in the USA from 2.06% to 2.27%, the UK from 1.76% to 1.96% and Germany from 0.59% to 0.63%. The long-term 10 year government bond yields fell in Japan from 0.35% to 0.25%. In Australia, the rate increased from 2.70% to 2.85%. A market price change of $2.0b was recorded for portfolio debt securities assets and -$12.5b in portfolio debt securities liabilities in the December quarter 2015. The Australian dollar appreciated against a number of the major currencies in the December quarter 2015. It increased 4.2% against the US Dollar, 6.5% against the Chinese renminbi, 4.7% against the Japanese yen, 7.2% against the European euro, 3.1% against the South Korean won, 6.6% against the UK pound sterling and 3.5% against the Singapore dollar. The Australian dollar depreciated 3.0% against the New Zealand dollar. The Trade Weighted Index (TWI)(footnote 4) (footnote 5) , recorded a rise of 4.7%. This is reflected in exchange rate changes for foreign assets of $52.3b and foreign liabilities of -$38.4b. RELATIONSHIP BETWEEN IPD, EPI AND IPI(footnote 6) In original terms, the IPD for total goods credits fell 5.3% and the chain Laspeyres price index for goods exports fell 5.5%. The Export Price Index (EPI)(footnote 7) fell 5.4% during the December quarter 2015. In original terms, the IPD for total goods debits fell 0.6% and the chain Laspeyres price index for goods imports fell 0.1%. The Import Price Index (IPI) (footnote 7) fell 0.3% during the December 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 2.2% between the September and December quarter 2015 while the EPI for rural goods decreased 3.5%. The RBA Commodity Price Index for non-rural commodities decreased 6.5% while the EPI for non-rural goods total (excluding non-monetary gold) decreased 6.3%. 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. CALENDAR YEAR 2015 SITUATION CURRENT ACCOUNT In original terms, the balance on current account in 2015 was a deficit of $75.1b, an increase of $26.0b (53%) on the deficit of $49.0b recorded in 2014. The balance on goods and services was a deficit of $33.5b, an increase of $23.7b on the deficit of $9.8b recorded in 2014. The 2015 goods deficit of $25.8b was a turnaround of $26.2b on the surplus of $0.4b in 2014. The 2015 services deficit of $7.7b was a decrease of $2.5b (24%) on the deficit of $10.2b in 2014. The 2015 net primary income deficit increased $2.1b (6%), with a decrease in primary income credits of $0.8b (1%) and an increase in primary income debits of $1.4b (2%). The 2015 secondary income deficit increased $0.2b (8%), with an increase in secondary income credits of $0.04b and an increase in secondary income debits of $0.2b (2%). FINANCIAL ACCOUNT The balance on financial account recorded a net inflow of $70.5b, with a net inflow on equity of $37.3b and a net inflow on debt of $33.2b. This result was an increase of $25.7b on the net inflow of $44.8b recorded for the previous year as a result of:
INTERNATIONAL INVESTMENT POSITION Australia's net international investment position as at 31 December 2015 was a net foreign liability of $943.6b. This was an increase of $62.3b (7%) on the position a year earlier as a result of:
During 2015, Australia's net foreign equity increased $3.3b (6%) on the previous year, to a net asset position of $61.9b, with exchange rate changes of -$51.9b and other changes of -$18.6b, partly offset by net transactions of $37.3b and price changes of $29.9b. Australia's net foreign debt liability increased by $65.6b (7%) on the previous year, to a net liability position of $1,005.6b, with net transactions of $33.2b, exchange rate changes of $26.5b and other changes of $7.6b, partly offset by price changes of -$1.8b. At 31 December 2015, the ratio of Australia's net international investment position to GDP using the latest available GDP figure (for the year ended 30 September 2015 using current prices) was 58.3%. This compares with 55.1% 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 19 February 2016. <back 3 MSCI Global Market Indexes 2015, Morgan Stanley Capital International, viewed 11 January 2016. <back 4 Bloomberg, Bloomberg Professional Service, viewed 12 January 2016. <back 5 Exchange Rates – Daily 2014 to Current, Reserve Bank of Australia – Statistical Tables, viewed 12 January 2016. <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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