5302.0 - Balance of Payments and International Investment Position, Australia, Mar 2015 
Quality Declaration
Quality Declaration ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 02/06/2015
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ANALYSIS AND COMMENTS
In seasonally adjusted current price terms, the March quarter 2015 current account deficit was $10,741m, an increase of $502m (5%) on the December quarter 2014 deficit. In trend current price terms, the March quarter 2015 current account deficit was $10,138m, a decrease of $978m (9%) on the December quarter 2014 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 March quarter 2015 fell 2.9% to 85.7, with a decrease of 2.9% in the Implicit Price Deflator (IPD) for goods and services credits and the IPD for goods and services debits remaining steady at 108.3. In trend terms, the terms of trade for net goods and services fell 1.9% to 86.3. BALANCE ON GOODS AND SERVICES In seasonally adjusted chain volume terms, the balance on goods and services was a surplus of $9,273m, a rise of $1,816m (24%) on the December quarter 2014 surplus of $7,457m. The net surplus on goods rose $1,507m (20%) on the December quarter 2014 surplus of $7,385m. Goods credits rose $4,027m (6%) and goods debits rose $2,520m (4%). The net surplus on services rose $309m (429%) on the December quarter 2014 surplus of $72m. The increase in the balance on goods and services surplus, in seasonally adjusted chain volume terms, is expected to contribute 0.5 percentage points to growth in the March quarter 2015 volume measure of GDP, assuming no significant revision to the GDP chain volume estimate for the December quarter 2014. GOODS The trend estimate of net goods at current prices for the March quarter 2015 was a deficit of $1,882m, an increase of $17m (1%) on the December quarter 2014 deficit of $1,865m. In seasonally adjusted terms at current prices, net goods was a deficit of $2,235m, an increase of $1,019m (84%) on the December quarter 2014 deficit of $1,216m.
Goods Credits The trend estimate of goods credits at current prices rose $909m (1%) to $66,119m in the March quarter 2015. In seasonally adjusted terms at current prices, goods credits rose $1,345m (2%) to $66,630m, with volumes up 6% and prices down 4%. Rural Goods Exports of rural goods, in seasonally adjusted terms at current prices, rose $1,132m (11%) to $11,262m, with volumes up 12% and prices down 1%. The main components contributing to the rise were:
Non-rural Goods Exports of non-rural goods, in seasonally adjusted terms at current prices, fell $407m (1%) to $51,187m, with volumes up 4% and prices down 5%. The main components contributing to the fall were:
Partly offsetting these falls was coal, coke and briquettes, up $879m (9%), with volumes up 6% and prices up 3%. Net Exports of Goods Under Merchanting Net exports of goods under merchanting, in seasonally adjusted terms at current prices, fell $20m (16%), with volumes down 16% and prices down 1%. Non-monetary Gold Non-monetary gold, in original and seasonally adjusted terms at current prices, rose $641m (19%), with volumes up 17% and prices up 1%. Goods Debits The trend estimate of goods debits at current prices rose $926m (1%) to $68,001m in the March quarter 2015. In seasonally adjusted terms at current prices, goods debits rose $2,365m (4%) to $68,865m, with volumes up 4%. Consumption Goods Imports of consumption goods, in seasonally adjusted terms at current prices, rose $1,081m (5%) to $22,172m, with volumes up 2% and prices up 3%. The main components contributing to the rise were:
Capital Goods Imports of capital goods, in seasonally adjusted terms at current prices, rose $932m (6%) to $17,324m, with volumes up 2% and prices up 4%. 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 $215m (1%) to $28,366m, with volumes up 6% and prices down 5%. The main components contributing to the rise were:
Partly offsetting these rises was fuels and lubricants, down $1,687m (19%), with volumes up 6% and prices down 24%. Non-monetary Gold Imports of non-monetary gold, in original and seasonally adjusted terms at current prices, rose $138m (16%) to $1,004m, with volumes up 21% and prices down 4%. SERVICES The trend estimate of net services at current prices was a deficit of $1,201m, a decrease of $479m (29%) on the December quarter 2014 deficit of $1,680m. In seasonally adjusted terms at current prices, net services was a deficit of $1,465m, a decrease of $27m (2%) on the December quarter 2014 deficit of $1,492m.
Services Credits Services credits, in seasonally adjusted terms at current prices, rose $218m (1%) to $15,953m, with volumes up 1%. The main component contributing to the rise was travel, up $218m (2%), with volumes up 2%. In seasonally adjusted terms, tourism related service credits rose $235m (2%) to $10,092m. Services Debits Services debits, in seasonally adjusted terms at current prices, rose $193m (1%) to $17,419m, with volumes down 1% and prices up 2%. The main components contributing to the rise were:
Partly offsetting these rises was other services, down $37m (1%), with volumes down 6% and prices up 5%. In seasonally adjusted terms, tourism related service debits rose $14m to $8,631m. PRIMARY INCOME The trend estimate of the net primary income deficit at current prices, fell $504m (7%) to $6,520m in the March quarter 2015. The seasonally adjusted estimate of the net primary income deficit at current prices, fell $434m (6%) to $6,525m in the March quarter 2015. Primary Income Credits Primary income credits, in seasonally adjusted terms at current prices, fell $116m (1%) to $13,472m. The main component contributing to the fall was portfolio investment asset, interest, down $211m (11%). Primary Income Debits Primary income debits, in seasonally adjusted terms at current prices, fell $550m (3%) to $19,997m. The main component contributing to the fall was portfolio investment liabilities, interest, down $791m (14%). SECONDARY INCOME The trend estimate of the net secondary income deficit at current prices, fell $12m (2%) to $535m in the March quarter 2015. In seasonally adjusted terms, the net secondary income deficit at current prices, fell $58m (10%) to $515m in the March quarter 2015. CAPITAL ACCOUNT The balance on the capital account, in original terms, recorded a net outflow of $133m, which was driven by an outflow of $133 in capital transfers in the March quarter 2015. FINANCIAL ACCOUNT The balance on the financial account, in original terms, recorded a net inflow of $11.0b, which was driven by a net inflow of equity of $9.6b and a net inflow of debt of $1.4b. The financial account surplus decreased $0.7b to $11.0b in the March quarter 2015, from $11.7b in the December quarter 2014. Direct Investment Direct investment recorded a net inflow of $14.2b in the March quarter 2015, an increase of $2.3b from the net inflow of $11.9b in the December quarter 2014, where:
Portfolio investment Portfolio investment recorded a net inflow of $17.8b, an increase of $7.9b on the net inflow of $9.9b in the December quarter 2014, where:
Financial derivatives Financial derivatives recorded a net inflow of $1.5b, a turnaround of $4.5b on the net outflow of $3.0b in the December quarter 2014. Other investment Other investment recorded a net outflow of $16.9b, an increase of $12.4b on the net outflow of $4.5b in the December quarter 2014. This was driven by the net outflow in loans of $20.7b and partly offset by the net inflow in currency and deposits of $3.0b. Reserve assets Reserve assets recorded an outflow of $5.6b, an increase of $2.9b on the outflow of $2.7b in the December quarter 2014. This was driven by the RBA’s increase in short-term debt securities of $10.2b, partially offset by a decrease in currency and deposits of $4.6b. INTERNATIONAL INVESTMENT POSITION (IIP) Australia's net IIP liability position was $878.4b at 31 March 2015, an increase of $11.7b (1%) on the 31 December 2014 position of $866.7b. Australia's net foreign debt liability increased $27.6b (3%) to a net liability position of $954.7b. Australia's net foreign equity increased $15.9 (26%) to a net asset position of $76.3b at 31 March 2015. The changes contributing to this result are shown in the following table. INTERNATIONAL INVESTMENT POSITION, By Net Foreign Equity and Net Foreign Debt
SUPPLEMENTARY INFORMATION CONDITIONS The conditions in the global economy showed modest growth for most countries in the March 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 China (1.3%), European Union (0.4%), UK (0.3%) and the USA (0.1%). Quarterly growth rates fell for Greece (-0.2%). Australia's international investment activities during the quarter were as follows:
The Australian share market, as measured by the MSCI global index(footnote 3), increased 9.0% in the March quarter 2015, following an increase of 2.1% in the December quarter 2014. There were increases in all major markets: Germany 21.7%, France 17.8%, Japan 9.5%, Hong Kong 5.3%, UK 2.9%, Canada 2.2%, Switzerland 1.6%, Singapore 1.3%, USA 0.9% and New Zealand 0.4%. A market price change of -$16.1b was recorded for foreign equity assets and $36.8b in foreign equity liabilities in the March quarter 2015. According to Bloomberg(footnote 4) , the composite corporate benchmark yield decreased in Australia from 3.52% to 3.13%, UK from 2.99% to 2.65%, Germany from 1.17% to 0.99% and USA from 3.23% to 2.96%, but increased in Japan from 0.27% to 0.35%. The long-term 10 year government bond yields decreased in USA from 2.17% to 1.94%, UK from 1.76% to 1.58%, Germany from 0.54% to 0.27%, but increased in Japan from 0.33% to 0.40%. In Australia, the rate decreased from 2.96% to 2.48%. Market price changes were recorded for both portfolio debt securities assets of -$0.4b and liabilities of $6.2b in the March quarter 2015. The Australian dollar depreciated against a number of the major currencies in the March quarter 2015. It decreased 8.8% against the Swiss franc, 7.9% against the Indian rupee, 7.0% against the Hong Kong dollar, 6.9% against the US dollar, 6.9% against the Chinese renminbi, 6.4% against the Japanese yen, 5.3% against the South Korean won, 3.1% against the Singapore dollar, 2.6% against the New Zealand dollar, 2.0% against the Indonesian rupiah, 2.0% against the UK pound sterling and 1.1% against Malaysian ringgit. The Australian dollar appreciated 5.2% against Danish krone, 4.8% against the European euro, 1.8% against the Canadian dollar and 0.7% against the Norwegian krone. The Trade Weighted Index (TWI) (footnote 4),(footnote 5) recorded a decrease of 4.8%. This is reflected in exchange rate changes for foreign assets of -$46.9b and foreign liabilities of $30.1b. RELATIONSHIP BETWEEN IPD, EPI AND IPI(footnote 6) In original terms, the IPD for total goods credits fell 1.6% and the chain Laspeyres price index for goods exports fell 1.4%. The Export Price Index (EPI)(footnote 7) fell 0.8% during the March 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 0.2% during the March 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 increased 1.1% between the December quarter 2014 and March quarter 2015 while the EPI for rural goods increased 1.0%. The RBA Commodity Price Index for non-rural commodities increased 0.6% while the EPI for non-rural goods total (excluding non-monetary gold) decreased 1.6%. 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 18 May 2015. <back 3 MSCI Global Market Indexes 2015, Morgan Stanley Capital International, viewed 7 April 2015. <back 4 Bloomberg, Bloomberg Professional Service, viewed 10 April 2015. <back 5 Exchange Rates – Daily 2015 to Current, Reserve Bank of Australia - Statistical Tables, viewed 7 April 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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