Discuss the main features of Australia's recent Balance of Payment performance & the impacts of a high current account deficit on the Australian economy.

Australia?s balance of payment is a record of consentaneous transaction between Australia & angstrom unit; the residuum of the human being (over a period of one year). It consists of two answer for, the current account (which handbills gold flows from exports/ events, income and current transfers) and the Capital & Financial figure (Financial assets or liabilities). The BOP is an indicator on the health of the prudence because it records fiscal transactions coming in and bulge of the economy. Trends in our pecuniary transaction represent export (aggregate demand), debt ( foreign liability) and our integration with the spherical economy as we become more trade intensive. As strong as reflecting on the structure of our economy (i.e. a goodness base exporter and an intermediate/capital base importer); it similarly highlights our imbalances with the rest of the world (CAD). The current account is a organized measure of Australia?s economic transaction with the rest o f the world. Currently, Australia is campaign a deficit which reflects the fact that we pay more for import & income then what we have stand hold for our export. The gelt Income figure (how lots we earn from our investment/assets oversea i.e. commendation minus any payment to foreign owned assets in Australia i.e. debit) reflects this, and has since blown out from -6.9% in 1985 to -20.2% in 2001-02.

Net goods and function (how much we receive for export relative to import) are to a fault in a deficit. CAD as a % of gross domestic product has since average 4.5% and has join on to 6.1% in the last pecuniary year, mainly fueled by our dependence on foreign investment due to depri vation of domestic nest egg. The cause of a! large CAD lies in our structural and cyclical problem. The scratch line structural problem lies in our lack of domestic savings which hasresulted in increased get (and hence increases in... If you want to get a full essay, pasture it on our website: OrderEssay.net

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