Key points
- Trade balance is largest component.
- Persistent deficits can pressure currency.
- Surpluses indicate net lending to rest of world.
Example
Germany ran current account surpluses of around 8% of GDP in the mid-2010s, meaning it was saving more than it invested at home and lending the difference to the rest of the world.
In history
In 2022 the US current account deficit was close to $1 trillion, almost 4% of GDP, its largest share of the economy since 2008.
Related terms