Answer to Question #270904 in Macroeconomics for unknown

Question

“A country with current account deficit is indicate a sign of weakness while a country with

current account surplus is indicate a sign of strength in terms of economic growth”

Do you agree with the above statement? Justify your answer.

Answer 1

Yes it is true. this is because when a country has a current account deficit, it means it imports more than it exports. Surpluses are common in emerging economies, while deficits are common in developed ones. A current account deficit isn't always bad for a country's economy—external debt might be utilized to fund profitable initiatives.