The Current Account Deficit is a measurement of a country’s trade where the value of the goods and services it imports exceeds the value of the products it exports. In order to finance this shortfall, a country must borrow from other countries or attract foreign investment. The current account deficit can be harmful to a country’s economy if it becomes too large, as it can lead to an increase in debt levels and make the country more vulnerable to external shocks.There are several reasons why a country might run a current account deficit.For example, if domestic demand for goods and services is high relative to supply, then imports will exceed exports and result in a current account deficit. Alternatively, if investment outweighs savings then this will also lead to increased borrowing and cause the current account balance to become negative.A number of factors can influence whether or not a particular country experiences deficits or surpluses in its trade balance including economic growth rates, interest rates, exchange rates between currencies and commodity prices.
