Download 34 Balance of Payments File

Balance of
Payments
Definition
A
record of all transactions leading to
international trade.
 This
is between private individuals. Not
Governments.
 Exports-
Goods and services sold abroad.
 Imports-
Goods and services bought
abroad.
Visible Trade
 The
trade of physical goods.
 Balance of Trade- The difference
between visible exports and visible
imports.
Busiest ports in the world
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1. Shanghai
2. Singapore
3. Hong Kong
4. Shenzen
5. Busan
6. Ningbo-Zoushan
7. Guangzhou
8. Quingdao
Invisible Trade
•
The trade of services.
Balance of Payments
 The
current account- The part of the
balance of payments where all of the
imports and exports are recorded.
 It
includes both visible and invisible trade.
Current Account
•
Goods
•
Services
•
Income
•
Current transfers- currency received with
nothing received as a return.
Capital Account
 Records
the flow of money into and out of
a country from transactions resulting to
savings, investment and speculation.
The effects of a current
account deficit:
Import more than Export
 An
A
increase in external debt.
rise in unemployment
 Downward
rate.
 Structural
pressure on the exchange
weakness- lack of investment.
The effects of a current
account surplus:
Export more than Import
 Rising
employment rates.
 Foreign
currency reserves
 Domestic
shortages if too many goods
are sold abroad.
A
rising exchange rate will raise the price
of exports which may affect demand in
the future.
A
country with very high surplus means
other countries will have a deficit. This
could lead to international instability.
The Government
 Governments
payments.
 They
prefer an equal balance of
may take steps to ensure this.
 Import
Tariffs
 Devaluing
Currency