Balance of payments

The balance of payments refers to the accounts that sum up a country’s financial position relative to other countries. It is made up of the ‘current account’ and the ‘capital account’. The current account covers the balance of imports and exports of goods (referred to as ‘visibles’ and invisibles’).

Invisibles are things like financial services and entertainment services. Madonna’s CDs would count as a visible export for the US (assuming they were made in the US), but on tour abroad, the singer herself would count as an invisible export in that she provides a service as an entertainer. The capital account covers the difference between the capital which the country has invested in other countries, and the capital invested by other countries in it.

Merryn

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