Current account surplus/deficit

This is a measure of the position of one country relative to the rest of the world in terms of imports and exports. It captures the difference between total visible (goods) and invisible (services, including tourism) exports and imports.

So, when a British tourist spends their hard-earned pounds abroad, for example, it is recorded as an invisible import for the UK. The current account balance can be positive (where a country exports more than it imports), or negative, suggesting the opposite. America, for example, is a big net importer of goods from China and runs a deficit, whereas China runs a surplus as a large exporter.

Large deficits only matter when the rest of the world loses faith in the ability of a country to fund the balance. The ‘capital account’ helps here. This records investment flows in and out of a country. So, for example, when Nissan builds a car plant here it creates a positive capital inflow for Britain. The greater these sorts of flows the better for the host’s currency.

MoneyWeek magazine

Latest issue:

Magazine cover
Heading higher?

Or are house prices set to fall?

The UK's best-selling financial magazine. Take a FREE trial today.
Claim 4 FREE Issues

'Would you rather upset God, or have Him just ignore you?'

In the first of three interviews with Merryn Somerset Webb, Hugh Hendry, manager of the Eclectica Fund, talks about what it takes to be a good hedge fund manager – and how he learned to stop worrying and love central banks.


Which investment platform?

When it comes to buying shares and funds, there are several investment platforms and brokers to choose from. They all offer various fee structures to suit individual investing habits.
Find out which one is best for you.


20 November 1980: The Lake Peigneur disaster

On this day 34 years ago, blundering oilmen turned a ten-foot deep freshwater lake in Louisiana into a saltwater lake over a thousand feet deep.