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Balance of Payments: Current Account definitions

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  • Current Account
    Section of international accounts tracking short-term transactions like trade, investment income, and transfers with other countries.
  • Net Exports
    Total value difference between what a country sells abroad and what it buys from other countries, including both goods and services.
  • Balance on Goods
    Difference between the value of physical items sold to and bought from other countries, often called the trade balance.
  • Balance on Services
    Difference between the value of intangible offerings, such as tourism or banking, sold to and bought from other countries.
  • Trade Deficit
    Situation where the value of imports consistently exceeds the value of exports, resulting in more money leaving than entering.
  • Trade Surplus
    Condition where the value of exports is greater than the value of imports, leading to a net inflow of funds.
  • Investment Income
    Earnings from foreign assets, such as interest and dividends, received by residents or paid to foreign investors.
  • Net Investment Income
    Difference between what residents earn from foreign investments and what foreigners earn from domestic investments.
  • Net Transfers
    Funds sent between countries without a direct exchange, including foreign aid, remittances, and pension payments.
  • Remittances
    Money sent by individuals working abroad to family members in their home country, contributing to net transfers.
  • Foreign Aid
    Financial assistance provided by one country to another, often for humanitarian or development purposes, included in net transfers.
  • Balance of Payments
    Comprehensive record of all economic transactions between residents of a country and the rest of the world.
  • Trade Balance
    Another term for the balance on goods, focusing on the net result of exports and imports of physical products.