Balance of payments

Definition

The balance of payments is a comprehensive record of all economic transactions between the residents of one country and the rest of the world over a specific period. It includes trade in goods and services, financial transfers, and investments.

Related terms

Trade Deficit:

A situation where a country's imports exceed its exports, indicating it is spending more on foreign trade than it is earning.

Current Account:

Part of the balance of payments that includes transactions in goods, services, investment incomes, and current transfers.

Capital Account:

This component of the balance of payments records all transactions involving the purchase or sale of assets between residents and non-residents