Question

How and why is current account and capital & financial account with net surpluses beneficial for a small and resource lacking economy (e.g Singapore)?

Answer 1

T economics, a country's three Conporents of its balande 아 pa nut are Capital, current and finanial accant The aurent account daals oith Shost-term tranactians knouon as actual tanechiou, as tay hawe real impact on o,butt and o goods and senias in br etonn h Capital accont la avecord 어扶e inuous and outflows o capital that ckrectl ate acoisforeinasd and liabilitles The capital accout Aous refacta actos Such as Commexcial boong balha, 人nwestments, loo sand afitul..A A accaunt geaftale, coith.vegand to Rnancial aset.女ndidas diect iestmert, Postf resene. awet wken d b seetor folio inwestment ard account. Por example, 따lke US nna a Cumert accout deht oill also have a The VS ing manufactured cost od toys Fron china (us cwrrent account dt) Chiraues this foreian cumenas to by Us bonds

account a Riouw mona fro the Us to china to buy goods but also a Fla ofrom Chue to the Us twrough th frantial actount to finana the more austuinalok than a deficit fond y smoog A dehat may ocaơ due tingh gouth and strong consumer Spening rater than untonpetitiventts A we take exampes t countries like Ruasfa od vere Tueda have epemenced a balante ot Paumart crisiS because they haue been adversely atetd by a full m the ma ot oil 따ich danegesecret revere very auickly and davelaping Courblea more vulnerable to idormational nuesto s ottdrauln. A devaluatio in the excharge rath codo restore Conputitives ord mprove Cunvert ve current Acony Can wun an overall Gopaiutor For ex rauvins doon atal bunt's reurve holdhn A.iase, An aeral BoP susplus Ca be absorbed bj addng tuto ardal ban's ree hold/ngs.