Australia has recorded current account deficits for most of the postwar period. From the 1950s through the 1970s, these deficits were relatively small and reflected a high level of investment associated with the development of the country’s natural resources, a high rate of population growth, and a large need for physical infrastructure. Since the beginning of the 1980s, however, Australia has suffered a significant structural deterioration in its external position. The current account deficit has widened to double its earlier levels, generating a large increase in the stock of net external liabilities, which is now quite high by industrial country standards. The deterioration of the current account can be attributed to a trend decline in national saving, which has fallen markedly since the mid-1970s, to one of the lowest levels in the OECD, rather than to a rise in investment, which has actually declined as a share of GDP in the 1990s, after remaining broadly unchanged throughout the 1970s and 1980s.