The Current Account consists of payments and receipts resulting from trade in goods and services in the current period, Income payments and receipts of interest, dividends and rents and transfer Payments.
A deficit in the current account is the situation where the total value of current receipts for goods, services, incomes and current transfers exceed the total value of equivalent payments. This is typically the situation for Australia
The current account records
The balance of goods and services or net exports
Net income
Net unrequited transfers
The Balance of goods and services
The Balance of goods and services is related to net exports (X-M) but is broken into two components
Balance on merchandise trade – these are exports and imports on “visible” goods such as cars wheat wool and TV’s
Net services are the balance of trade in invisible goods such as airline trips cargo, freight and banking and insurance services
Net Income
Is the difference between income earned by Australian residents from foreigners (recorded as credits) and income earned by foreigners by Australians (recorded as debits).
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