A current account deficit happens when a country spends more money on foreign goods, services, and income transfers than it earns from selling its own to the rest of the world within a specific period.

It is a core part of the balance of payments and shows that a country is currently borrowing from other nations to pay for its imports.

Key features include:

• It is usually paid for by capital inflows, such as borrowing money or selling local assets to foreign investors.
• It may show that a country is consuming more than it can currently produce.
• It can be healthy if the money is used for investments that boost future economic growth.
• If the deficit lasts a long time, it might cause the national currency to depreciate in value.
• The balance includes four main parts: trade in goods, services, primary income, and secondary income.

A deficit is not always a bad sign; it depends on how the borrowed money is used and whether the country can pay it back in the future.