Why does Australia have a current account surplus? [HSC Economics Review Episode #25]

Current account what??? In this episode, we're going to dive into the big question of why Australia has a current account surplus and how HSC Economics students can use this knowledge effectively!

Have more questions about HSC Economics? Leave them in the comments - we’d love to hear from you!

So take a second and say ‘Hey’ and ask a question ;)

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[sbeering]

I'm studying Economics through UWA and our lecture explains the CA surplus as a direct effect of the Savings - Investment gap having now switched (due to higher saving/uncertainty related to the pandemic) - higher savings has resulted in domestic investment now being effectively covered locally and Australians now have net investment outflow internationally. This results in a negative Capital and Financial Account and a positive/surplus Current Account balance. The linkage between the two accounts is through the exchange rate (outflow of AUD through overseas investment increasing supply and weakening the dollar). From a look at the RBA explainers they appear to match this logic therefore the directionality of the CA surplus really comes from the CFA & S-I.

[kan]

When Will You do the Economics predictions for 2021?

[owenread]

what do you guys think the essays will be this year