ANALYSIS AND COMMENTS


INTERNATIONAL INVESTMENT POSITION

Australia’s net international investment liability position as at 31 December 2016 was $1,021.6b, an increase of $60.9b (6%) on the previous year.

Level of foreign investment in Australia

The level of foreign investment in Australia increased $153.3b (5%) to reach $3,192.4b for the year ended 31 December 2016. Portfolio investment accounted for $1,659.8b (52%), direct investment for $796.1b (25%), other investment for $524.0b (16%) and financial derivatives for $212.5b (7%). Of the portfolio investment liabilities, debt securities accounted for $1,134.0b (36% of foreign investment in Australia) and equity securities for $525.8b (17% of foreign investment in Australia).

The leading investor countries for the year ended 31 December 2016 were:

• United States of America $860.9b (27%)
• United Kingdom $515.5b (16%)
• Belgium $270.1b (9%)
• Japan $213.5b (7%)
• Hong Kong (SAR of China) $100.9b (3%)
• Singapore $98.9b (3%).

The following graph illustrates the levels, by leading countries, of the total level of foreign investment in Australia for the year ended 31 December 2016.




Level of Australian investment abroad

The level of Australian investment abroad reached $2,170.8b for the year ended 31 December 2016, an increase of $92.4b (4%) on the previous year. Portfolio investment accounted for $869.8b (40%), direct investment for $554.9b (26%), other investment for $476.6b (22%), financial derivatives for $193.4b (9%) and reserve assets for $76.1b (4%). Of the portfolio investment assets, equity securities accounted for $553.7b (26% of Australian investment abroad) and debt securities $316.2b (15% of Australian investment abroad).

The leading investment destination countries for the year ended 31 December 2016 were:

• United States of America $617.4b (28%)
• United Kingdom $350.5b (16%)
• Japan $108.3b (5%)
• New Zealand $106.9b (5%)
• China (excludes SARs and Taiwan Province) $87.9b (4%)
• Germany $65.8b (3%).
  

The following graph illustrates the levels, by leading countries, of the total level of Australian investment abroad for the year ended 31 December 2016.




FINANCIAL ACCOUNT TRANSACTIONS

The financial account for the year ended 31 December 2016 recorded a net inflow of $44.9b. This result is down $26.8b on the net inflow of $71.8b recorded for the previous year.


Foreign investment in Australia - Transactions

Foreign investment in Australia recorded a net outflow of $26.0b for the year ended 31 December 2016, a turnaround of $110.9b on the net inflow of $84.9b for the previous year.

The leading countries recording net outflows during 2016 were:

• United States of America $66.4b (45%)
• United Kingdom $48.0b (33%)
• Cayman Islands $4.5b (3%).

Partly offsetting these, net inflows were recorded for the following countries:

• Belgium $29.9b (26%)
• Japan $13.8b (12%)
• Luxembourg $13.1b (11%).

The following graph illustrates the transactions, by leading countries, of net financial transactions for foreign investment in Australia for the year ended 31 December 2016.




Australian investment abroad - Transactions

Australian investment abroad recorded a net inflow of $70.9b for the year ended 31 December 2016, a turnaround of $84.1b on the net outflow of $13.2b for the previous year.

The leading countries recording net inflows during 2016 were:

• United Kingdom $60.2 (48%)
• United States of America $25.1b (20%)
• Singapore $6.8b (5%).

Partly offsetting these, net outflows were recorded for the following countries:

• China (excludes SARs and Taiwan) $15.7b (29%)
• Japan $8.3b (15%)
• Cayman Islands $4.6b (8%).

The following graph illustrates the transactions, by leading countries, of net financial transactions for Australian investment abroad for the year ended 31 December 2016.




INCOME

Income debits totalled $83.3b for the year ended 31 December 2016, an increase of $0.6b on income debits for the previous year. The main countries to which income accrued for the year ended 31 December 2016 were:

• United States of America $21.7b (26%)
• Japan $7.7b (9%)
• United Kingdom $7.3b (9%)
• Belgium $4.9b (6%)
• Singapore $2.8b (3%)
• Hong Kong (SAR of China) $2.3b (3%).

Income credits totalled $58.9b for the year ended 31 December 2016, an increase of $11.6b on income credits for the previous year. The main countries from which income accrued for the year ended 31 December 2016 were:

• United Kingdom $14.1b (24%)
• United States of America $9.2b (16%)
• New Zealand $5.0b (9%)
• Germany $1.8b (3%)
• China (excludes SAR and Taiwan) $1.6b (3%)
• Singapore $1.2b (2%).

NOTE

Data are subject to revision and the full historical time series will be revised as part of the September quarter 5302.0 - Balance of Payments and International Investment Position, Australia.