Australia's Balance of Payments

Abstract

year ending this June. Australia's vulnerability has two basic causes. One is that Australians, stimulated by the prosperity of last year's record wool prices, domestic inflation, and large programs of public works and private industrial de? velopment, have indulged in an orgy of overseas buying. For the first time since the war, suppliers and shippers have been able to fill and transport nearly all orders far more promptly than usual. The second cause is a decline in export revenue due to a 50 per? cent drop in the prices paid this year for wool and, in less part, to a serious drought that has reduced the supply of food for export. It has been dramatically illustrated to Australians how much their trade position still depends upon the price of wool and, in contrast with prewar years, how little other primary produc? tion now contributes.1 The current deficit is therefore intertwined with a deeper, long-term problem of Australia's economic position?food production.2 Much emphasis and dis? cussion are being given today to the growing inadequacy of domestic food supplies, and to the more immediately urgent decline of food exports. The de? bate on this subject was broadened and brought to a head by the necessity for action on the increasingly unfavorable balance of payments. Financing this unbalanced trade was possible for a time because Australian reserves in London had