Definition

1. Noun:
   • A comprehensive accounting record: The balance of international payments is a systematic statement that summarizes all economic transactions between a country's residents and the rest of the world during a specific period, typically one year. It includes trade in goods and services, financial flows, and transfers.

Usage

• The is a key macroeconomic indicator used by governments and economists to assess a nation's economic health and its financial interactions globally.
• It is divided into three main accounts: the current account, the capital account, and the financial account.
• A country is said to have a surplus in its (a favorable balance) when the total inflows of money exceed the total outflows. Conversely, a deficit occurs when outflows exceed inflows.

Examples

• Noun:
  • The government published the quarterly report on the nation's balance of international payments.
  • A persistent deficit in the balance of international payments can put downward pressure on a country's currency.
  • Economists analyze the balance of international payments to understand trends in foreign investment and trade.

Advanced Usage

• "Balance of payments crisis": A situation where a country is unable to pay for essential imports or service its foreign debt due to a severe deficit.
  • The sudden stop in capital inflows triggered a balance of payments crisis.

Variants and Related Words

• Balance of payments (BOP): The common abbreviated term for .
• Current account balance: A major component of the BOP, recording trade in goods and services, income, and current transfers.
• Capital account: A component of the BOP that records capital transfers and the acquisition/disposal of non-produced, non-financial assets.
• Financial account: A component of the BOP that records transactions involving financial assets and liabilities between residents and non-residents.

Synonyms

• External accounts: A less common synonym referring to a country's international financial position.
• International transaction accounts: A formal term describing the systematic recording.

Related Phrases

• Balance of payments adjustment: The process, either automatic or policy-induced, by which a payments imbalance is corrected.
  • A currency devaluation is one method of balance of payments adjustment.
• Balance of payments identity: The accounting principle that the sum of the current account, capital account, and financial account must theoretically equal zero.
  • In theory, the balance of payments identity must hold, but in practice, a statistical discrepancy is recorded.

Noun

1. a system of recording all of a country's economic transactions with the rest of the world over a period of one year
   • a favorable balance of payments exists when more payments are coming in than going out