The Relationship Between Current Deficit and Economic Growth

The concepts of current deficit and economic growth which are related to each other are among the most important macroeconomic indicators that provide with information about a country¿s economic structure. Especially seen in the recent years; the high growth rates coming along with globalization process cause current account to have deficits by increasing the need for intermediate goods in production and by satisfying these needs via importing these goods. The increased current deficits affect growth process in a negative way by increasing sovereign risk and refer to the outbreak of crises; and also they affect the short and long-term future plans of the domestic and foreign investors. In the developing countries such as Turkey and Brazil, the relationship between current deficit and economic growth has always been a subject of discussions. Therefore, the aim of this study is to investigate the relationship between current deficit and economic growth in terms of Turkey and Brazil.