A current account deficit is a problem if it is only used to fund new investment, not consumption.

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A current account deficit is a problem regardless of whether the funds are used for new investment or consumption. It indicates that a country is importing more goods and services than it is exporting, which can lead to a depletion of foreign reserves and a dependence on borrowing to finance the deficit. This can potentially lead to economic instability and a vulnerability to external shocks.

A Current Account Deficit Is a Problem If It Is