This edition of Oliver’s Insights looks at total debt outstanding across major countries to see how Australia compares.
The key points are as follows:
- Australia has a low level of total debt compared to other major countries. But while public and corporate debt is low, one area of greater vulnerability is household debt.
- A chronic current account deficit in Australia and relatively high net international liabilities also means a degree of vulnerability to foreign investor sentiment – although this has been the case for decades.
- While Australia is not without debt risk, it is relatively low in part due to the flexibility the RBA has to cut interest rates further, the buffer the $A provides during extreme shocks, pent up demand in the non-mining parts of the economy and the low likelihood of a hard landing in China.
To read this edition of Oliver’s Insights, click here.