Economics explained
Category:
Balance of payments
The current account
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The current account balance is the overall balance of the trade in goods, trade in services, income and current transfers.
Current account transactions are subdivided into four parts:
Trade in goods:
The visible trade balance is a record of the export and import of physical goods. It is also known as the balance of trade in goods.
Examples
raw materials
semi-manufactured products
manufactured goods.
Trade in services:
The invisible trade balance is a record of the export and import of services (intangible products).
Examples
shipping
tourism
banking
insurance.
Income:
Income is divided into two parts:
Income from employment of residents by overseas firms
Income from capital investment overseas
Current transfers:
Examples
money spent on foreign aid
money sent home by people working abroad
taxes received by the government from foreign residents and firms
bank deposits held in overseas banks.