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
Turkish economy struggle the problem of current account deficit
and there is no correlation between exports and imports ratio, so
the main trouble is that there should be stabilize the balance of
payments. According to the Central Bank of the Republic of Turkey,
the current account deficit recorded USD 51,901 million in
January-October indicating a raise of USD 12,348 million, meanwhile
the current account deficit excluding except non-monetary gold
reduced by USD 2,318 million over the same period of the previous
year decaying to USD 42,220 million. Under these circumstances, the
current account deficit increases and this impact in the ratio of
foreign trade and income deficits increase. When the government
runs a budget deficit, national saving will decline unless private
saving increases by the full amount of the budget deficit, which is
unlikely. Since the saving and investment equation indicates that
the result of a decline in national saving must be a decline in
either domestic investment or net foreign investment.
Almost all economies are open economies which trade with and
invest in other countries. Turkish government try to solve the
problem of current account deficit and this situation bring huge
destruction in the economy. As a result of this, Turkish government
resettles in the economy so as to solve the problem of current
account deficit which is prominent issue because the sum of current
account and the financial account must be equal. Hence, the balance
of payments must also equal zero. The government is to make balance
between exports and imports, so this assists new investors to
invest in Turkey in terms of trade credits, loans, currency and
deposits and other assets and liabilities.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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