Current Account Deficit is a negative value of one of the national accounts of a particular state.
Current Account Deficit in practice: A negative value of the current account deficit in practice means that more capital leaves the state than it comes in - the state thus becomes a debtor in relation to other states. The deficit usually brings a weakening currency of the country. If the deficit reaches several percent of GDP, it is a significant negative effect.
Example: The current account deficit of India reached in the second quarter of 2013, a record 5.4 percent of GDP, which is historically the highest deficit in India’s balance of payments. In absolute terms the deficit is 22.3 billion dollars.
Related terms and methods:
- Balance of payments (BoP)
- Current Account
- National Accounts
- Government Budget
- The System of National Accounts (SNA)
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