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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.
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.
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: