Current account deficit
Definition. A current account deficit occurs when the total value of a country imports of goods and services plus net income and transfer outflows exceeds the corresponding inflows over a period. It indicates that the country is spending more on foreign transactions than it earns from them.
The deficit must be financed by a net inflow on the capital and financial account, such as borrowing or selling assets to foreigners. Persistent deficits can build up external liabilities.
This term belongs to The Balance of Payments in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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