The Effect of Total Petroleum Consumption on Current Account Balance: An Application for Upper-Middle Countries

The current account balance is a key macroeconomic indicator for all countries. One of the reasons for this importance to the current account balance is that the current account balance reflects an economys international competitiveness and the extent to which a country is living within its resources. The current account balance also gives guidance for foreign investors in making investment decisions as it helps to predict threats to macroeconomic stability. Another of the reasons taking place prevalently in the literature of the current account balance is that it helps policymakers in assessing the compatibility of macroeconomic policies with the goal of ensuring a sustainable external position. In this study, the relationship between total petroleum consumption-the current account balance in selected countries over the period 1980-2011 was surveyed. The empirical results show that the petroleum consumption is a crucial factor in deteriorating the countries current account balance.