Whether or not a current account deficit is economically significant will depend on a number of factors.
These include:
• the absolute size of the deficit
• its size in relation to GDP
• the duration of the deficit
• the composition of the deficit
• the ease with which it can be financed by the capital and financial accounts.
A long-term deficit, constituting a high percentage of GDP could well indicate a lack of competitiveness, perhaps caused by low productivity or an over-valued exchange rate
lydiajane74 answered the question on July 5, 2018 at 08:22
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