Current Account Deficit

Why it matters

• Reflects the gap between national savings and domestic investment.
• Influences exchange rate stability and foreign exchange reserve levels.
• Signals the degree of reliance on foreign capital inflows to bridge the funding gap.
• Impacts the sovereign credit rating and investor confidence in the domestic economy.

How it is asked

Focus on the components of the Balance of Payments, the relationship between CAD and currency depreciation, and the structural policy interventions used to manage trade imbalances.