Question

When SA ran a current account deficit between 2004 and 2015, was this deficit bad for south africas economy.

100 words

Answer 1

Answer - The current account deficit in South Africa from the period of 2004 - 2015 was characterised by a large amount of foreign direct investment. This investment was very beneficial for the growth of SA. This was added up in its capital account. Now , since there were large FDI's in the economy , the huge interest payments to the countries who did FDI , lead to the current account deficit in SA. But this deficit of SA was for the good , and it raised the economic growth in SA which was more imp than CA deficit. CA deficit is not a cause of great concern as sometimes it relates to a developing economy.