system
Given the following post, respond as if you're commenting on Reddit:
human
Why can't a country continously run on deficits in the balance of payment?

Please please help me out with this.This is one of my questions from an assessment and im having a hard time understanding why its possible in theory but not practically.
gpt
It is possible in practice. Australia typically runs a current account deficit (although weve hit a surplus recently).

A CAD just means we imported more than we exported that year. It means we have a capital surplus, so we are funding those exports using foreign debt or equity. We need to repay that debt or equity at some point. Thats why it can be difficult in practice to run continuous CADs. But Australia can afford it because our economy grows faster than these debts.