Current Account Deficit Problems

August 2004 | Economic Analysis

Recently, the government amended its full-year current account deficit forecast to US$10.8bn for 2004, compared with its previous projection of US$7.6bn. The decision to revise upwards is no surprise, but the question is whether this new forecast is overly-optimistic. Tourism receipts, which we expect to reach US$8.5bn over the summer months, will be an important support to forex inflows. However, domestic demand is strong. The government expects real GNP growth this year to exceed 5% y-o-y. Meanwhile, consumer loans reportedly rose by 44.4% between the end of 2003 and August 6. The strong performance of the economy, in conjunction with

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