Balance of Payments

The balance of payments is a comprehensive statement of a country’s economic transactions with the rest of the world for a given period of time—normally a quarter or a year. It is composed of the current account and the capital account: the current account measures transactions associated with trade in goods and services, investment income and transfers, while the capital account measures financial flows such as purchases of bonds and equities or direct investment activities. The balance of payments should not be confused with the balance of trade, which is a narrower concept that measures only trade in goods and services.