Final answer:
If Country A is running a current account surplus, Country B must be running a current account deficit. This situation indicates that Country A is a net lender (with an inflow of investment from abroad), while Country B is a net borrower (with an outflow of investment to abroad). Both country’s financial accounts should balance each other out in a two-country scenario.
Step-by-step explanation:
Assuming we are discussing only two countries in the global economy and Country A is running a current account surplus, it must be true that Country B is running a current account deficit. A country's current account includes transactions in goods, services, investment incomes, and unilateral transfers. If Country A exports more than it imports, it receives more foreign currency than it spends, leading to a surplus. This also suggests Country A is a net lender to the rest of the world, as it is in the position to invest its excess funds in other countries.
Country B, on the other hand, would logically be in the opposite position. The current account deficit of Country B indicates that it imports more than it exports, spending more foreign currency than it receives. This translates to Country B borrowing from abroad to finance its additional consumption or investments, making it a net borrower. Since there are only two countries in this scenario, the financial flows between them must balance out; the surplus in Country A's current account is mirrored by the deficit in Country B's current account.
It is also essential to understand that a deficit does not inherently signal an unhealthy economy. It may reflect robust economic activity such as substantial investments that lead to positive economic outcomes in the long run, similar to the example of the Democratic Republic of the Congo's situation post-civil war.