Current account deficit
Current Account Deficit (CAD)
MacroeconomicsThe shortfall between a country's foreign earnings (exports, remittances) and foreign spending (imports). A persistent CAD must be financed by foreign capital inflows.
Formula
CAD = Imports of Goods and Services - Exports - Net Transfers
Why it matters
A widening CAD makes the rupee vulnerable whenever foreign flows reverse, which feeds into imported inflation and rate policy.
Indian example
Related terms
Learn the concept
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