RBA’s Hauser Says Current Account Surpluses May Not Persist
2024-06-27 09:30:00.0 GMT

By Swati Pandey
(Bloomberg) — Australia’s five-year streak of current
account surpluses may not persist, Reserve Bank No. 2 Andrew
Hauser said, and even if they do, the economy will still need a
lot of foreign investment.
From 1974 to 2018, Australia ran consistent current account
deficits as the nation imported capital in net terms. That
reversed in 2019, spurred by an elevated terms of trade,
increased pension fund balances and precautionary savings during
the pandemic, Hauser said Thursday in his maiden speech since
taking on the role of deputy governor at the RBA.
“It is unclear whether such surpluses will persist. The
most recent data suggest they may not,” said Hauser, who
previously worked at the Bank of England.
“But even if they do, that does not mean Australia’s need
for inward foreign investment is a thing of the past. And that
is because a substantial slice of national savings is placed in
overseas assets, in order to diversify risk and return.”
In his speech titled ‘Strangers in Paradise,’ Hauser listed
three key drivers of Australia’s economic success:
* An “unusually diverse” range of resource endowments
* Strong but adaptable pro-growth institutions
* A welcoming environment to foreign investment

Hauser, who sits on the RBA’s interest-rate setting board,
delved into the history of Australia to understand the various
factors that have worked in its favor. However, his speech
steered clear of addressing monetary policy and inflation.
Australia is struggling with the so-called last mile of
inflation as the RBA tries to return it to the 2-3% target.
Data this week showed a gauge of consumer prices rose by
more than expected for a third straight month in May. That
prompted money markets to price in a 50-50 chance of a rate hike
at the RBA’s next meeting in August.
Ahead of the Aug. 5-6 meeting, the board will see data on
employment, retail sales and a complete overview of consumer
prices in the second-quarter inflation report released on July
31.