According to the ABS Australian National Accounts, in seasonally adjusted terms, Australia became a net lender to overseas this quarter. This is the first time since June quarter 1975 that Australia has been a net lender as opposed to a net borrower. The ratio of net lending to overseas to GDP was 1.1% this quarter.
Graph 1. National net lending (net borrowing), relative to GDP, seasonally adjusted
At a sector level, net borrowing by general government declined to its
lowest level since September 2008, driven by sustained increases in
saving. Non-financial corporations’ net borrowing has also continued to
decline in line with slowing investment in non-residential buildings and
structures. Households recorded a small increase in net borrowing this
quarter, however the level remains lower than it was a year ago, driven
by weaker investment in dwellings.
Graph 2. Net lending (net borrowing), by sector, seasonally adjusted
National capital investment continues to fall
Household investment as a proportion of GDP has now declined for four
consecutive quarters. This decline continues to be driven by weakness in
dwelling investment in line with soft housing market conditions.
Capital investment by non-financial corporations as a proportion of GDP
was broadly unchanged this quarter. Machinery and equipment rose
strongly on the back of continued investment in autonomous machinery by
large mining companies. However, this was offset by softness in
non-residential building investment with the completion of projects
outstripping commencements this quarter. New engineering construction
was also weak, continuing to be impacted by liquified natural gas
projects transitioning from construction into the production phase.
General government investment as a proportion of GDP fell slightly to
3.6% this quarter. from 3.8% in March 2019. Despite the fall this
quarter, the ratio has been trending up since mid-2015, reflecting
increased public infrastructure investment by state and local general
governments to support population growth and growing demand for public
services.
Graph 3. Gross fixed capital formation, by sector, relative to GDP, seasonally adjusted
