What Is Current Account Deficit? How Does It Affect A Country?

[Good-Person]

The current account deficit is a kind of condition where a specific country spends more money in the form of foreign exchange as compared to the amount of money or foreign currencies it receives. So, what are the effects of current account deficit on the economy of a country?

 

[Ernestnari]

When a country imports more goods than it exports, it puts a downward pressure on it's currency which would cause it to lose value. The country's currency would be on a free fall.

 

[eenya00]

this is very dangerous to the manufacturing sector of any country, as there would be pressure on the local currency leading to increase in the prices of raw materials which would affect the profit margin of the company and ultimately lead to job loss for so many persons.

 

[Heatman]

The current account deficit is a kind of condition where a specific country spends more money in the form of foreign exchange as compared to the amount of money or foreign currencies it receives. So, what are the effects of current account deficit on the economy of a country?

I believe that the summary of an account deficit simply means that a particular country is already in-debt and they must have probably borrowed money from international bodies to be able to finance their economy/budget which they are still yet to be able to pay back.

 

[Good-Person]

I believe that the summary of an account deficit simply means that a particular country is already in-debt and they must have probably borrowed money from international bodies to be able to finance their economy/budget which they are still yet to be able to pay back.

In many cases, the country has to borrow money. They have to borrow money so that they could clear bad debts. They borrow loans to pay loans. In many cases, they return the loan back and ask for the loan once again. Interest charges obviously increase whenever a country asks for loans once again.

 

[Heatman]

In many cases, the country has to borrow money. They have to borrow money so that they could clear bad debts. They borrow loans to pay loans. In many cases, they return the loan back and ask for the loan once again. Interest charges obviously increase whenever a country asks for loans once again.

My country is currently in serious debt because of constant borrowing from international bodies and also other countries. And even now, our government are still planning on borrowing another money which begs the question what they are doing with the money they have been getting for years...?

 

[Heatman]

The current account deficit can be financed through borrowing from other countries, attracting foreign investment, or drawing down its foreign exchange reserves.

The real truth is that no matter the amount of money those countries end up borrowing from other countries, if they work up to boost their own internal revenue generation, the problem will never go away. They will keep borrowing till the country is in serious debt.