Country's current account
A country's balance of payments - its financial situation relative to the world - is made up of the current account and the capital account...
A country's balance of payments - its financial situation relative to the world - is made up of the current account and the capital account. The current account measures the flows of actual goods and services in and out of the country, recording earnings from exports minus expenditure on imports. If a country sells more by value than it buys, it is running a current-account surplus. If the reverse is true, it will have a deficit.
To make up the difference, it will have to sell assets, encourage foreign investment, or increase its foreign debt. In theory, if a country is running a deficit, demand for its currency will fall (and so will its value), making imports more expensive and exports cheaper, balancing things out.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
Stop inheritance tax perk on pensions, says IFS
The government could raise billions of pounds in revenue by closing inheritance tax loopholes, such as on pensions and AIM shares. Is your pension at risk?
By Ruth Emery Published
-
Revealed: Best buy-to-let property hotspots in the UK
Looking for the best buy-to-let property locations in the UK? We reveal the top 10 postcodes with the strongest rental returns
By Oojal Dhanjal Published