Why some national account imbalances are fine but others aren't

Michael Armstrong (FCA) [ICAEW Regional Director for Middle East, Africa and South Asia]

The current account balance is primarily the difference between a country’s total exports and imports of goods and services, usually measured as a share of GDP. Surpluses tend to be reported as “good” or “healthy”, while deficits are often regarded as “bad”. The importance of an economy’s balance of payments can never be overstated as it reveals various aspects of a country’s international economic position and presents the international financial position of the country.

In the case of a developing country like Kenya, the balance of payments shows how much its economic development depends on financial assistance from developed countries.