What is a current account?

A current account is an account that shows the balance of trade of a country. The balance of trade is the difference between imports and exports and net income from abroad and net transfers. Goods and services are consumed in the current period, hence the name current account.

A current is an indicator of the state of the economy in a country. A surplus in the current account indicates that a nation is a lender to other countries and that its foreign assets have increased by the surplus amount. Current account deficits indicates that the country is a net borrower from other countries with decreased assets by the deficit amount.