Quick questions on Australia's balance of payments explained: HSC Economics Topic 2

The balance of payments is the statistical record of all economic transactions between Australian residents and the rest of the world over a given period, prepared by the Australian Bureau of Statistics (cat. no. 5302.0, quarterly). It has two main accounts:

The current account has four sub-components:

For most of the post-1980 period, Australia ran current account deficits of 3 to 6 percent of GDP, financed by net capital inflow. The deficits reflected:

Long-run drivers of Australia's CA deficit:

Exports minus imports of goods (merchandise) and services. Australia's BOGS is heavily influenced by iron ore, coal and LNG prices.

Income payments to and from non-residents: interest, dividends, profits and compensation of employees. Australia runs a persistent net primary income deficit (around 4 percent of GDP) because of its large stock of net foreign liabilities.

Transfers without a corresponding good or service: foreign aid, workers' remittances, pension transfers.

A small balancing item covering capital transfers and acquisition of non-produced, non-financial assets (patents, copyrights). Often included with the financial account.

"Australia has a CAD" is weak; "Australia recorded a current account surplus of around plus 1.0% of GDP in 2023 (ABS)" earns the application mark. Use RBA/ABS as your source tag when citing balance-of-payments figures.