Balance of payment

Balance of Payments Account

A record of all financial deals over a period of time between economic agents of one country and all other countries.

Current Account

Part of the balance of payments that records payments for the purchase and sale of goods and services.

Capital Account

A record of transactions involving the transfer of ownership of assets including capital transfers.

Financial Account

An extensive account that includes direct investment, portfolio investment, and other investments.

Balance of Payments Formula

Balance of payments = balance of current account + balance of capital account + balance of financial account.

Trade Deficit

Occurs when imports exceed exports in the trade of goods and services.

Trade Surplus

Occurs when exports exceed imports in the trade of goods and services.

Visible Trade

The buying and selling of physical goods, recorded in the current account.

Invisible Trade

The exchange of services, recorded in the current account.

Primary Income

Income resulting from the loan of factors of production abroad such as dividends or profits from overseas operations.

Secondary Income

Income transferred between countries without a corresponding output, such as remittances.

Balance of Trade in Goods

The difference between visible exports and visible imports.

Balance of Trade in Services

The difference between invisible exports and invisible imports.