Report

Which countries (regions) can maintain a current account deficit for a long time?

We compare the United States, Latin America, the euro zone, the United Kingdom, Africa, India, China, Japan, Southeast Asian countries and South Korea. Among these countries (regions), the United States, Latin America, India, Africa and the United Kingdom have had current account deficits, and therefore net external debt, since 2002. What has been the effect of these external deficits? Repeated balance of payments crises (Latin America and Africa); A significant depreciation of the exchange rate (Latin America, Africa, United Kingdom, and also Southeast Asian countries that had net external debt until 2019; India has a nominal exchange rate that has depreciated markedly, but a real exchange rate that has appreciated); Only in the case of the United States, the absence of a crisis resulting from large external debt thanks to massive long-term capital inflows from the rest of the world, which cover the US current account deficit.
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