Balance of Payments / Trade (Imports & Exports)

Difference between a country's exports and imports of goods and services

Foreign Trade

The Balance of Payments (BoP) is a detailed summary of a country’s economic transactions with the rest of the world over a specific period—usually a year or a quarter. It records all monetary inflows and outflows arising from trade in goods and services, investment activities, financial transfers, and foreign aid.

In theory, the Balance of Payments (BoP) always balances, meaning that the sum of the Current Account, Capital Account, Financial Account, and Errors and Omissions equals zero:

Current Account + Capital Account + Financial Account + Errors and Omissions = 0

However, if the Current Account shows a deficit or surplus, it must be offset by corresponding inflows or outflows in the Capital and Financial Accounts, or by changes in a country’s foreign exchange reserves. This ensures that the overall BoP remains in equilibrium.

The balance of trade refers to the difference between a country's exports and imports of goods and services over a specified period. It is a fundamental component of a nation's balance of payments, reflecting its economic transactions with the rest of the world.

1. Trade Surplus: Occurs when a country’s exports exceed its imports, resulting in a positive trade balance.
2. Trade Deficit: Occurs when a country’s imports exceed its exports, leading to a negative trade balance.

AI for Global Business

1. AI and Global Trade
2. AI in Global Finance and Risk Management
3. Influence of religion on financial systems

Academic Programs

(c) EENI Global Business School (1995-2025)
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