Question

What is more important, a country’s current

account balance or GDP growth? Why?

Short answer

GDP growth is more important.

Step-by-step solution

Step 1. Definition

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

Step 2. Explanation

Because GDP represents the health of an economy so it is more important. Higher GDP means improvement in the economy, high employment, higher rates of wages and in negative GDP opposite of this will happen.

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 comparably more important than the current account balance.