CURRENT ACCOUNT SURPLUS Meaning and
Definition
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A current account surplus refers to a situation in which a country's total value of exports of goods, services, and transfers exceeds its total value of imports. This concept is primarily used in economics to measure a nation's trade balance with the rest of the world over a specific period, usually a year. It is a key indicator for assessing a country's economic stability and international financial position.
To calculate a current account surplus, economists add the value of exports of goods and services, along with any transfers received from abroad, and then subtract the value of imports and transfers sent abroad. If the resulting sum is positive, it signifies a current account surplus, reflecting that the country is exporting more than it imports, essentially exporting capital to other nations.
A current account surplus has several implications for the economy of a country. It suggests that the country is a net creditor to the rest of the world and is accumulating foreign assets. It can also indicate that the domestic economy is producing goods and services that are highly demanded globally. Furthermore, a surplus can strengthen the domestic currency and improve the country's borrowing capacity, potentially leading to increased investments and economic growth.
However, a persistent current account surplus may also have some negative consequences. It can result in a loss of competitiveness for domestic industries, as an overly strong currency may make exports more expensive and imports cheaper. Additionally, a surplus can generate political tensions and protectionist measures from trade partners who perceive the country's trade practices as unfair or detrimental to their own economies.
Common Misspellings for CURRENT ACCOUNT SURPLUS
- xurrent account surplus
- vurrent account surplus
- furrent account surplus
- durrent account surplus
- cyrrent account surplus
- chrrent account surplus
- cjrrent account surplus
- cirrent account surplus
- c8rrent account surplus
- c7rrent account surplus
- cuerent account surplus
- cudrent account surplus
- cufrent account surplus
- cutrent account surplus
- cu5rent account surplus
- cu4rent account surplus
- cureent account surplus
- curdent account surplus
- curfent account surplus
- curtent account surplus
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