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Does Australia Have a Current Account Deficit?
Current account deficit occurs when the expenditure for foreign goods and services excess the income receiving from national's sale, the government expenditure is larger than its revenue, and the investment is over the national's saving. Deciding whether it is good or bad that the country run the current account deficit depends on the source in which the country spends the money. If it is spent to the investment sector, the economic will be boosted. On the other hand, if it is financed to the national consumption, there is no return in the future so the country may face the problem about returning foreign debts. Whether the current account deficits were the problem to Australia depends on the cause in each year. For example, the current account deficit in 1998-99, was about 5.3 percent of GDP, caused by the weakness of Australian's trade performance and the slower in economics growth is a problem to Australia which needed a little concern. Whereas, the current account deficit in 2001-02, which was about 3.1 percent of GDP, caused by the excess of exports of goods and products is not a problem. This is because the major imports were in the manufacturing industry, which implied that they would be an increasing in capital stock and national's product and also a decreasing in unemployment rate.
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