Balance of payments

The balance of payments comprises the current account, capital account and financial account. The current account includes net trade (exports-imports), net cross border investments and net transfer payments. Capital accounts include financial transactions that affect a country’s future income, production, or savings. The financial account measures international ownership of assets such as direct investments, securities like stocks and bonds, and commodities such as gold and hard currency. The balance of payment should ideally be zero. If it is positive, the country hs a surplus and if it’s negative, the country has a deficit.

« Back to Glossary Index