can a country have a trade deficit and current account surplus simultaneously?
Hey Radhika,
Yes. A country can have a trade deficit and current account surplus simultaneously. This happens in a high saving country. In a high saving country, people give loans to other countries by purchasing foreign assets and earns interest on them. The inflow of interest finances the net imports of the goods. Hence, interest inflow leads to trade deficit on one hand and current account surplus on the other hand.
Keep Posting!!
Yes. A country can have a trade deficit and current account surplus simultaneously. This happens in a high saving country. In a high saving country, people give loans to other countries by purchasing foreign assets and earns interest on them. The inflow of interest finances the net imports of the goods. Hence, interest inflow leads to trade deficit on one hand and current account surplus on the other hand.
Keep Posting!!