Guy Debelle: A balance of payments

Address by Mr Guy Debelle, Deputy Governor of the Reserve Bank of Australia, to the Economic Society of Australia, Canberra, 27 August 2019.

The views expressed in this speech are those of the speaker and not the view of the BIS.

When I started my working life here in Canberra at the Treasury just over 30 years ago, one of the most prominent macroeconomic issues was the current account deficit. Heated discussions took place about twin deficits, banana republics, consenting adults and whether or not the current account should be an objective for monetary policy. Early on in my Treasury career, in between my radio shows on 2XX, I worked in the Balance of Payments section. There was a whole unit devoted to analysing and forecasting the current account deficit, given its prominence in the economic and political debate.

Today, three decades on and back in Canberra, I am going to again focus on the current account balance and Australia's external position. But the rationale for doing so today is quite different to that in the 1980s. Today, the current account deficit is the smallest it has been as a share of the economy since the 1970s and the trade surplus is about the largest it has been since the 1950s. The payments are the closest to being in balance in decades!