Challenges Dealing With Current Account Deficit For An Open Economy: Turkey Case In Point

Major countries can encounter the problem of current account deficit which bring economic problems in developing countries. Current account is the part of the balance of payments which records a country's net exports, net investment income and net transfer. In particular, positive net sales to abroad ordinarily make contribution a current account surplus as the value interest. A current account deficit must be exactly offset by a financial account surplus. The financial account is equal to net capital flows, which is equal to net foreign investment yet with the opposite sign. Since the current account balance is approximately equal to net exports. In regard to this, net exports will equal net foreign investment.