Risks of sustained high CAD include:
- Growth of foreign liabilities - A CAD results in financial inflow, either in the form of borrowing from overseas (foreign debt) or through selling equity in items such as property/companies (foreign equity). This will mean that lenders may become more reluctant to lend to Aus or to invest in Aus, and decisions affecting the Aus economy will increasingly be made by international businesses and not be Australians
…
