1360.0 - Measuring Australia's Economy, 2003
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 03/02/2003
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Australia’s economic transactions with the rest of the world are entered in a set of double entry accounts which make up the balance of payments. It is the use of the double entry system that enables balances to be derived, but the balance of payments cannot be summarised in just a single balance.
The current account measures exports and imports of goods and services, Australia’s income earned by and from the rest of the world and current transfers (counterpart in the double entry system for one-sided transactions that are of a non-capital nature).
The capital account records capital transfers (such as migrants’ transfers and debt forgiveness) and the acquisition/disposal of non-produced, non-financial assets (such as sales of embassy land or copyrights) between residents and non-residents.
The financial account records transactions in financial assets and liabilities (such as shares, bonds and loans) between residents and non-residents.
In principle, the deficit (or surplus) on the current account should be matched by a surplus (or deficit) on the capital and financial account. In practice, this is not the case. The balances on the capital and financial account and the current account are reconciled by the item net errors and omissions. This is the sum of net errors (transactions not measured accurately) and omissions (transactions not measured at all).