Australian CAD

From 1991 to 2003, the GDP growth rate of Australia had averaged at almost 4% every year. The increase in domestic demand, low level of public debt, low inflation, sound financial system and sound record of structural reforms were the other factors that contributed to its growth.

1980s 

The CAD had increased to about 5% of the GDP. The upswing was because of slow increase in exports. In 1988, the reserve bank tightened the monetary policy and the Australian dollar appreciated against major currencies. Thus in early 1990s CAD narrowed to 3.7% of GDP. 

1990s

The CAD reached a peak of 5.8%. There was a growing domestic demand in the country and increase in imports. The government and private firms had been borrowing funds from abroad to finance their investments.

At the end of 1997, the CAD started decreasing as Australia diversified its exports from Asian to other countries. In the fiscal year 1997-98, Australian exports grew by 8.4%. 

The CAD increased from 5% of GDP in 1998 to 5.7% in 1999. The East Asian countries recovered after the crises in 1999 and their devalued currencies were able to grab major import markets across the world. 

At the end of the year 1999-00, the government recorded a fiscal surplus of 2.1% of GDP. Higher tax revenues and less expenditure contributed to the rise. But most of the improvement was due to the shift in the accounting standards. 

2000s

2000-01:2.7%~increased exports due to tax reforms and weak AUD.

2001-02:3.1%~slow world economic recovery and increased imports.

2002-03:6.7%~decline in exports coupled with growth in consumer spending which inflated household debt.