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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 balance on current account, recorded a deficit of $7,594m (original terms) in the June quarter 2002. For the period since the June quarter 1990, the highest deficit recorded was in the September quarter 1999, $10,371m. The current account deficit for 2001-02 was $22,212m.


BALANCE OF PAYMENTS, CURRENT ACCOUNT
Period
Balance on current account
$m

ANNUAL
1996-1997
-17,602
1997-1998
-22,807
1998-1999
-33,607
1999-2000
-32,283
2000-2001
-18,170
2001-2002
-22,212

QUARTERLY
2000-2001
March
-3,273
June
-3,613
2001-2002
September
-4,581
December
-5,659
March
-4,378
June
-7,594

Source: Balance of Payments and International Investment Position, Australia (5302.0).


Australia has had a current account deficit in most years. This indicates that the nation as a whole has been investing more overseas than is available from its saving. To fund this shortfall, Australia has had to acquire finance and other capital from non-residents. These capital and financial inflows are measured in the capital and financial account of the balance of payments. The balance on the capital and financial account in a period is, in principle, equal and offsetting to the deficit on the current account of the balance of payments in that period.

The continued financial account surpluses have contributed to increases in Australia’s net foreign equity liabilities and net foreign debt liabilities. Interest accruing on the net debt is the major cause of Australia’s large net income deficits, which represent a substantial component of Australia’s current account deficits.

Explanatory Notes

The balance on current account is the sum of the balances on goods trade, services trade, income and current transfers. The balances are derived by summing credit entries, which are shown without sign, and debit entries, which have a negative sign. If the sum of the balances is negative, a nation has a current account deficit, otherwise a nation has a current account surplus.

The balance on current account consists of:
  • Balance on goods and services: the difference between the total credit (export) value and the total debit (import) value of goods and services. Within the balance on goods and services there is a net services balance and a net goods balance;
  • Net income: the difference between the value of income, such as dividends and interest, earned by residents from non-residents (credits) and that earned by non-residents from residents (debits); and
  • Net current transfers: the difference between current transfer credits and debits. A current transfer is recorded when real or financial resources of a non-capital nature are provided without something of economic value being received in return. For example, Australia’s foreign aid abroad supplies the rest of the world with goods or cash and requires an offsetting debit transfer entry while pensions received by residents from foreign governments provides Australia with cash and requires a credit entry transfer.

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