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Is Australias Current Account Deficit a problem for Australia?

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A substantial current account deficit is not necessarily a bad thing for certain countries. Developing counties may run a current account deficit in the short term to increase local productivity and exports in the future. But since Australia is already a developed country, sustaining a high Current Account Deficit can be harmful, a good example of a country with a high Current Account Deficit is Greece, coupled with debt woes, Greece has become unsustainable and will probably need a larger bailout from the EU and the IMF. In my mind the trick to counter this is to have low debt and low unfunded liabilities which greatly decreases volatility in a country’s markets making it sustainable, not only in the short run but in the long run. However in today’s comparative advantage world, innovation and keeping ahead of the competition isn’t something that huge companies do it could very well be something that countries also have to get into, to stay out of debt and have a Current Account Surplu

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