The trillion dollar secret

Clime Investment Management

Clime Investment Management

Following the release of the Sept Qtr national accounts, we opined that Australian’s would be shocked to learn when our net foreign debt breached $1T in the Dec Qtr. We were wrong on two accounts. 1) The net foreign debt had actually breached $1T in the Sept Qtr. The ABS had actually underestimated the Sept Current Account deficit by $2B in its Sept Qtr release; and 2) The media & Government jumped on the surprising GDP growth in the Dec Qtr and totally glossed over the National Foreign Debt – again! The below table indicates two poor trends. The trade deficit is annualising at about $40B p.a. Concurrently the Current Account (that includes the trade deficit) is lurching towards $80B p.a. In time what could confront Australia would be a collective decision by foreign investors or debt holders to withdraw funds from the Australian economy. This occurred in 2014/15 and it drove the currency lower. A view (even if wrong) that Australia has no potential to pay back its foreign debt could cause a currency crisis. Read more (VIEW LINK)


Clime Investment Management
Funds Management & Stock Research
Clime Investment Management

The Clime Group is a respected and independent Australian Financial Services Company, which seeks to deliver excellent service and strong risk-adjusted total returns, closely aligned with the objectives of our clients.

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