Current Account
Short definition
The current account is the net of goods, services, income and current transfers. A deficit creates an external financing need and FX pressure; a surplus the reverse.
Detailed explanation
The trade balance is a part of the current account; gold and energy shocks jump the deficit. The financial account (portfolio, loans, FDI) tells how the gap is closed — short portfolio is fragile.
REER appreciation widens a deficit. For the firm the signal is: imported inputs and FX debt get expensive together when financing stops.
Why it matters for the CFO
A current-account gap plus short financing brings an FX and rate shock together in a sudden stop. Importers and FX debtors are open to that double shock.
How to read it
Deficit/GDP is not a crisis line by itself; tenor and who finances set it. Energy prices can make a gap look “structural”.
Related calculators
Güven Sayılgan’s writing on this topic
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What to learn next
Definitions are educational. They are not investment, credit or tax advice.