Australia's Current Account Deficit

The record of all transactions between Australia and the rest of the world is known as the current account. The constituents of these transactions include goods and services, interest repayments on loans, and remitted profits by overseas owned companies, all of which play a role in the determination of whether the account is in a deficit or surplus state. For many countries a major problem is that a current account deficit severely effects foreign debt and can lead to the degradation in the economy.

Traditionally, Australia's main exports have been agricultural commodities. However, in recent times the trend for Australia's exports have leant to minerals and fuels. There are major problems in relying on these export areas, as the fluctuations in the world prices can be extreme and unpredictable. This was illustrated in the 1980's when the wool prices changed dramatically.

Due to Australia's lack in technology in contrast to other countries such as the USA and Japan, the main imp...