Question

What is more important, a country’s current account balance or GDP growth? Why?

Short answer

GDP Growth.

Step-by-step solution

Step1. Introduction

Gross domestic product refers to the value of all the finished goods and services manufactured in a fixed time period.

Step2. Explanation

GDP represents the health of an economy and hence, it is more important. Higher GDP means improvement in the economy, high employment, higher rates of wages. Whereas when GDP value is low, complete opposite conditions shall prevail in the economy.

The current account balance tells us that the economy is in trade surplus or trade deficit but it doesn’t talk about the health of the economy. So that’s why GDP growth is comparatively more important than the current account balance.