Current Account Deficit in Australia - Causes, effects & recent trends (PLAN)

Since mid 1980s, Australia has been experiencing persistently large rate of flow reputation deficits

The current account deficit ( frump) represents the excess of debits in the current account in comparison to the credits; that is, the excess of money going away out to imports and income payments to abroad in comparison to the money coming in from exports and income payments from abroad

Each year Australia has been paying out considerably more than for goods, services and other income/transfer payments that what has been received

These trends are associated with the short and spacious term domestic and external influences that impact on the isotropy of goods and services and the net income balance in Australia including the structure of Australias export base, international competitiveness, structural change, terms of trade, foreign liabilities and servicing be and the levels of national savings

Australias high CAD has had several effects on the economy, including the growth of foreign liabilities, increased servicing costs, increase unpredictability in the exchange rate, constraints on future economic growth, more contractionary policies and the loss of international investor confidence.

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Firstly, in that location have been many another(prenominal) changes in Australias CAD over the past two decades

Australia has had a relatively high CAD overall, sustaining an average of 4% of the gross domestic product in the past two decades, which has given Australia one of the highest CAD outcomes amongst advanced economies

Since the mid 1980s the current account has been a deficit, ranging from 3-6% of gross domestic product over the past decade, resulting from a dramatic increase in Australias foreign liabilities and higher servicing costs in the 1980s

However during the 1990s there was no further deterioration of the CAD, averaging 4.4% of GDP

The CAD increased to 6.3% in 1994-94, but reached its lowest level in two decades in 2000-01 at 2.7% of the GDP,

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