Download Balance of Payments

Balance of Payments Activity
This is an edited extract from the Treasurer’s press release of 1 March 2005 titled
‘Balance of Payments – December Quarter 2004’.
You are required to match the 42 words in the righthand column with the 42 gaps in
the lefthand column.
You should use pencil and cross out each word when it has been used. Note: every
word must be used! (i.e. no words should remain)
Data released this morning by the __________ show that
Australia’s current account deficit (CAD) for the December quarter
2004 was $15.2 billion reflecting a widening of both the net
__________ deficit and the __________ balance. The net income
deficit increased by $758 million to $8.2 billion, driven by higher
__________ earned by foreign-owned Australian based companies,
consistent with strong growth in profits across the economy. The
__________ deficit rose by $180 million to $7.0 billion, with solid
__________ growth offset by continued strong growth in
__________ volumes.
The terms of __________ grew by 1.6 per cent in the December
quarter to be 9.9 per cent higher through the year, and are now at
their highest level since the September quarter 1974. The increase
in the terms of trade over the past year mainly reflects strong
increases in coal, iron ore and base metal __________. Australia’s
net __________ debt was $422 billion (current prices) in the
December quarter, an estimated 51 per cent of __________. The
general __________ share of Australia’s net foreign debt has
__________ sharply in recent years, accounting for only 5.0 per
cent of total net foreign debt in the December quarter – well below
the 17.2 per cent share in 1996. With the debt __________ ratio
currently at 9.3 per cent of export income, Australia’s ability to
service its net foreign debt is very __________, and certainly much
stronger than in the early 1990s when the debt servicing ratio hit a
peak of 20 per cent of __________ income. While Australia’s
export __________ rose in the December quarter, export growth
over the past year has been __________ and lower than is typical
for this stage of the world economic __________. In part, this is due
to the high level of the __________, which in trade __________
terms was more than 8 per cent higher than the post-float average
over the December quarter.
Furthermore, while strong growth in the __________ economy,
particularly in the United States and __________, has created a

ABS

Foreign

Trade

Government

Import

Prices

Export

Profits

Weighted

Export

Income

Cycle

Demand

Markets

Capacity

Exports

Flat

Macroeconomic

Sustainability

Repaid

Supply

Growth

Increases

CAD

Reforms

Trade

Trade
surge in __________ for mineral and energy commodities, long lead
times in the planning and construction of new mining projects have
meant that __________ increases have been slow. Combined with
rail and port bottlenecks, which may reflect inadequate __________
by state governments, this has resulted in only moderate
__________ in the volumes of our commodity exports over recent
quarters. In value terms, however, Australia has benefited from a
sharp increase in mineral __________ on world __________.
Over the past three years, Australia’s mining industry has invested
around $26.5 billion in the expansion of productive __________. As
this new capacity comes on line, including over 2005 06, it is likely
that Australia’s __________ of mineral commodities will increase
significantly. Combined with easing __________ growth, this should
see a narrowing of Australia’s __________ over the period ahead.
Moreover, __________ in export prices coming into effect in April
2005 should see the CAD narrow further, consistent with forecasts
released today by ABARE for 16 per cent growth in commodity
export earnings in 2005-06.
In marked contrast to previous increases in the CAD, the current
increase has occurred at a time of stability in Australia’s
__________ aggregates. The Government’s budget is in
__________, more than $70 billion of government debt has been
__________ since March 1996, __________ and __________ are
exceptionally low by historical standards and the __________ rate
is at 30 year lows. It is nonetheless important to maintain a strong
programme of economic __________ that will further strengthen the
Australian economy and enhance the __________ of economic
growth.

Prices

GDP

Strong

fallen

servicing

import

Investment

Unemployment

Inflation

interest rates

Surplus

volumes

exchange rate

World

China