The balance of payments records a country's trade, services and capital movements with the outside world. It provides information on the income a country receives and the payments it makes to the rest of the world. It is the economic reflection of imports and exports of goods, services, capital and transfers.
The Balance of Payments is made up of:
- Current account balance, which in turn includes:
- Trade balance.
- Balance of services.
- Income balance.
- Balance of transfers.
- Capital account balance.
- Financial account.
- Errors and omissions account.
The balance of payments provides general information on the country's economic situation, as it indicates whether its income and payments are in balance.
Related terms