The current-account deficit, now around 5% of GDP, is a key factor: if capital flows into America slowed even more sharply, or dried up, the adjustment involved in reducing the current-account deficit could be painful both for America and the rest of the world.
Despite a long history as a huge exporter of commodities, Indonesia has flipped from having a trade account surplus to a deficit in recent months, and last quarter recorded its biggest ever current-account deficit.
High international crude prices have exacerbated the government's fuel subsidy expenditures contributing to a higher fiscal deficit, and a worsening current account deficit.
"You have a budget deficit that is ballooning, a current account deficit deteriorating and you have investments both local and international at a standstill, you know taking a wait and see approach, " says El-Khazindar.
Thailand, whose whopping current-account deficit helped trigger the turmoil, is now running a monthly current-account surplus.
Much the same thing was happening in the U.S. While Robert Triffin was wailing about the supposedly inevitable and horribly destructive U.S. current account deficit, the U.S. was actually running a persistent current account surplus.
FORBES: Mind-Bending Idiocy Is The Reason We Don't Have A Gold Standard Today
America is now running an increasing deficit on its investment income, which will cause America's current-account deficit to widen indefinitely even if a weaker dollar stabilises the trade deficit.
"The result of the high current-account deficit has been the depreciation of the rupee, " he said.
Worrywarts abound in international finance circles--there's always nail-biting about this currency fluctuation or that account deficit.
People like Ken Rogoff talked about global imbalances in the current account deficit not being sustainable.
WSJ: Nouriel Roubini Says Nationalizing the Banks Is the Market-Friendly Solution
But now the current account deficit is no longer covered by foreign direct investment.
South Africa's current account deficit stands at a 22-year high and totals 4.2% of GDP.
But high inflation and a wide current-account deficit present obstacles to any such moves.
Many American economists and policymakers have long argued that the current-account deficit does not matter.
However, he says, Paulson has not done enough to curb the ballooning U.S. current account deficit.
In contrast, the U.S. is a chronic importer with a chronic current account deficit.
FORBES: Is The U.S. Economy Turning Japanese? Gary Shilling's View
The current-account deficit is no more than the accounting counterpart of that net inflow of capital.
All of which should help increase the trade surplus and further reduce the current-account deficit.
It is in good shape, with inflation at 9% and the current-account deficit improving.
Russia faces its first-ever current-account deficit, and much of its industry is in terrible shape.
America's current-account deficit is big and growing, and this is a legitimate cause for concern.
Notably, it had a large current-account deficit and a foreign-debt burden that was rising fast.
ECONOMIST: How did Australia buck the worldwide economic downturn?
The current-account deficit is more worrying because it suggests that competitiveness is steadily eroding.
ECONOMIST: The economy has had a big boost from much sounder management
Such developments will make it harder for America to finance its huge current-account deficit.
The current-account deficit, now around 5% of GDP, has reached levels which alarm some economists.
Partly because of privatisation, foreign direct investment should finance perhaps 60% of the current-account deficit.
It was the dollar that was losing support, as swing voters fretted about America's current-account deficit.
Without tax cuts the economy would have been weaker (and the current-account deficit smaller).
Rate cuts could potentially widen the current-account deficit by encouraging consumption and boosting demand for imported goods.
It turns out that the U.S. current account deficit has been easier to finance than pessimists think.
应用推荐