Deficit and savings investment

Typically closing the deficit is done by increasing (S-I) part of the CA equation. So we want to increase S and reduce I. We can achieve this if real rates increase → encouraging national saving and discouraging investing/borrowing to invest. Current account surplus, per the curriculum, reflects strong asset prices, therefore low discount rates (and low real rates). Vice versa, current account deficit can signify weakness, therefore high required returns (and high real rates) as compensation for higher risk.

I do not understand this logic at all. We want to savings and reduce investments? where does the savings go then? Investments increases the productivity ?

anybody?

If you have a CA surplus then your you’re likely lending other countries money to finance their purchase of your goods/what you’re exporting - you’re lending money abroad with the excess savings. If you didn’t have excess savings (likely due to a CA deficit) then you’d need to finance buying exports by borrowing from other countries - continuously borrowing to fund consumption as opposed to investments is bad in the long term.