Trade Deficit must exist, if a country is facing situation of Current...

Trade Deficit must exist, if a country is facing situation of Current Account Deficit (CAD).” Defend or refute the above mentioned statement with valid arguments.

Ans. Refute.

While a trade deficit often contributes to a current account deficit (CAD), it is not a strict requirement. A CAD can arise from deficits in other components such as services, income, and transfers, even if a country maintains a trade surplus. Therefore, the presence of a CAD does not necessarily imply a trade deficit, as it depends on the overall balance of all current account transactions, not just trade.