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Current Account Deficit

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15 views

Current Account Deficit

Uploaded by

kassahunashagrie4
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Amit Singh Lodhi

CURRENT
ACCOUNT
DEFICIT
A Deep Dive into Its
Causes and Implications
Amit Singh Lodhi 1.

What is
Current Account
Deficit?
The Current Account Deficit (CAD)
occurs when a country’s imports of
goods, services, and transfers exceed its
exports.
Key components include:

Trade
balance
Net income
from abroad

Net current
transfers
Amit Singh Lodhi 2.

Causes of
Current Account
Deficit
High Import Demand: Growing
economies often import more.

Declining Exports: Global


competition can reduce export
revenues.

Foreign Investments: Outflow of


capital can affect CAD negatively.

Currency Depreciation: Can


increase import costs.
Amit Singh Lodhi 3.

Implications of
Current Account
Deficit
A persistent CAD can lead to:

Depreciation of Currency:
Increasing the cost of imports.

Inflation: Higher import costs can


lead to inflationary pressures.

Dependence on Foreign Capital:


Increased vulnerability to global
market fluctuations.
Amit Singh Lodhi 4.

How to Manage
Current Account
Deficit?
To manage CAD, countries can:

Enhance Promote
export import
competitiveness substitution

Implement
Attract fiscal and
monetary
foreign policies to
investments control
inflation
Amit Singh Lodhi 5.

Case Study: India’s


Current Account
Deficit
In the fiscal year 2023-2024, India
experienced a Current Account Deficit of
2% of GDP due to:
Rising Crude Oil Prices: Imports
accounted for over $160 billion in FY24.
High Gold Imports: Gold remains a
significant contributor, with imports
crossing $50 billion.
Global Slowdown: Export growth
slowed due to reduced global demand
post-pandemic.
However, strong services exports and
remittances helped cushion the impact.
Amit Singh Lodhi 6.

Conclusion
Understanding and addressing
the Current Account Deficit is
crucial for economic stability.

Governments must work


towards balancing trade and
maintaining healthy foreign
exchange reserves.
Thank You
& Connect!
Thank you for exploring the topic of
Current Account Deficit with me! 🙏
Let’s stay connected for more insightful
posts on finance, economics, and
business.🌍📊
🔗 Follow me for regular updates and
feel free to send a connection request if
you’d like to network!
Let’s grow together! 🚀
Amit Singh Lodhi

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