The Current account deficits imply increasing liabilities to the rest of the world. External sustainability then depends on whether these can be met in the future without defaulting, i.e., normally through trade account surpluses. To run such surpluses without a fall in consumption, capital inflows should be used to increase future output. This paper tentatively finds that current account deficits reversals that follow investment booms are marked by better growth performance than those following consumption booms. It also shows that many recent large current account deficits have been predominantly the result of consumption or non-productive investment booms. By definition, the current account balance is equal to the difference between savings and investment. However, a given savings shortfall can be the result of very different absolute amounts of savings and investment. While this is obvious, this paper argues that this may merit more attention than it has been given in the past, and that it may be relevant for the assessment of external sustainability. Running a current account deficit implies that liabilities to the rest of the world are increasing. To assess external sustainability, it is, therefore, necessary to ascertain whether these liabilities can be met in the future without defaulting, i.e. normally through running future trade account surpluses. To run future trade account surpluses without a fall in consumption, the economy will have to use the capital inflow that occurs to increase future output. This can be achieved for example by increasing the rate of investment in assets that produce future returns, which can be used to pay off the creditors. In other words, the economy’s capacity for producing tradable goods and services needs to increase.