DETERMINANTS OF CURRENT ACCOUNT BALANCE IN BRICSIV COUNTRIES: PANEL DATA ANALYSIS 2000–2024
DOI:
https://doi.org/10.65886/ijde.v2i03.59Keywords:
Current Account Balance, Exchange Rate, Exports, Imports, FDI, GDP, BRICSIVAbstract
The current account balance is a primary indicator of the external sector that reflects the economic stability of a country and is of significant concern amid increasing global economic imbalances. Although various studies have examined the determinants of the current account balance, no research has comprehensively analyzed the BRICSIV group of countries-a combination of BRICS members with Indonesia and Vietnam-within a single panel framework over a 25-year period. This study aims to analyze the effect of the official exchange rate, total exports, total imports, foreign exchange reserves, foreign direct investment (FDI), and gross domestic product (GDP) on the current account balance of BRICSIV countries for the period 2000–2024. The study employs a quantitative approach using balanced panel data comprising 175 observations sourced from the World Bank World Development Indicators (WDI). Estimation was conducted through three approaches-Common Effect Model, Fixed Effect Model, and Random Effect Model-with the Chow test and Hausman test used to determine the best model, resulting in the Fixed Effect Model (FEM) as the most appropriate model. The estimation results indicate that total imports have a significant negative effect, total exports have a significant positive effect, and GDP has a significant positive effect on the current account balance, while the official exchange rate, foreign exchange reserves, and FDI do not have a significant effect. Simultaneously, all independent variables have a significant effect with a model explanatory power of 41.98%. These findings confirm that international trade performance and export-oriented economic growth are the main determinants of current account balance, so the governments of BRICSIV countries need to prioritize export diversification, control of non-essential imports, and growth strategies that support national export competitiveness.
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