Download No Slide Title

Balance of
Payments
The Balance of Payments Account
• Meaning of the balance of payments
• The current account
The Balance of Payments Account
• Meaning of the balance of payments
• The current account
– trade in goods
UK balance of payments: 2001 (£ millions)
CURRENT ACCOUNT
1. Trade in goods
a) Exports
b) Imports
Balance on trade in goods
2. Trade in services
a) Exports
b) Imports
Balance on trade in services
+191 211
224 259
33 048
+77 076
62 373
+11 114
Balance on trade in goods and services
21 345
3. Net income flows (wages and investment income)
+11 151
4. Net current transfers (government and private)
Current account balance
7 246
–17 440
The Balance of Payments Account
• Meaning of the balance of payments
• The current account
– trade in goods
– trade in services
UK balance of payments: 2001 (£ millions)
CURRENT ACCOUNT
1. Trade in goods
a) Exports
b) Imports
Balance on trade in goods
2. Trade in services
a) Exports
b) Imports
Balance on trade in services
+191 211
224 259
33 048
+77 076
62 373
+11 114
Balance on trade in goods and services
21 345
3. Net income flows (wages and investment income)
+11 151
4. Net current transfers (government and private)
Current account balance
7 246
–17 440
The Balance of Payments Account
• Meaning of the balance of payments
• The current account
– trade in goods
– trade in services
– balance of trade in goods and services
UK balance of payments: 2001 (£ millions)
CURRENT ACCOUNT
1. Trade in goods
a) Exports
b) Imports
Balance on trade in goods
2. Trade in services
a) Exports
b) Imports
Balance on trade in services
+191 211
224 259
33 048
+77 076
62 373
+11 114
Balance on trade in goods and services
21 345
3. Net income flows (wages and investment income)
+11 151
4. Net current transfers (government and private)
Current account balance
7 246
–17 440
The Balance of Payments Account
• Meaning of the balance of payments
• The current account
– trade in goods
– trade in services
– balance of trade in goods and services
– income flows
UK balance of payments: 2001 (£ millions)
CURRENT ACCOUNT
1. Trade in goods
a) Exports
b) Imports
Balance on trade in goods
2. Trade in services
a) Exports
b) Imports
Balance on trade in services
+191 211
224 259
33 048
+77 076
62 373
+11 114
Balance on trade in goods and services
21 345
3. Net income flows (wages and investment income)
+11 151
4. Net current transfers (government and private)
Current account balance
7 246
–17 440
The Balance of Payments Account
• Meaning of the balance of payments
• The current account
– trade in goods
– trade in services
– balance of trade in goods and services
– income flows
– current transfers of money
UK balance of payments: 2001 (£ millions)
CURRENT ACCOUNT
1. Trade in goods
a) Exports
b) Imports
Balance on trade in goods
2. Trade in services
a) Exports
b) Imports
Balance on trade in services
+191 211
224 259
33 048
+77 076
62 373
+11 114
Balance on trade in goods and services
21 345
3. Net income flows (wages and investment income)
+11 151
4. Net current transfers (government and private)
Current account balance
7 246
–17 440
The Balance of Payments Account
• Meaning of the balance of payments
• The current account
– trade in goods
– trade in services
– balance of trade in goods and services
– income flows
– current transfers of money
– balance on current account
UK balance of payments: 2001 (£ millions)
CURRENT ACCOUNT
1. Trade in goods
a) Exports
b) Imports
Balance on trade in goods
2. Trade in services
a) Exports
b) Imports
Balance on trade in services
+191 211
224 259
33 048
+77 076
62 373
+11 114
Balance on trade in goods and services
21 345
3. Net income flows (wages and investment income)
+11 151
4. Net current transfers (government and private)
Current account balance
7 246
–17 440
Current account balance as % of
GDP in selected countries: 1970–2003
Current account balance:% of GDP
5
4
3
2
1
0
-1
-2
-3
-4
-5
1970
1975
1980
1985
1990
1995
2000
Current account balance as % of
GDP in selected countries: 1970–2003
Current account balance:% of GDP
5
4
3
2
1
0
UK
-1
-2
-3
-4
-5
1970
1975
1980
1985
1990
1995
2000
Current account balance as % of
GDP in selected countries: 1970–2003
Current account balance:% of GDP
5
4
3
2
1
0
UK
-1
-2
-3
USA
-4
-5
1970
1975
1980
1985
1990
1995
2000
Current account balance as % of
GDP in selected countries: 1970–2003
Current account balance:% of GDP
5
4
3
2
Japan
1
0
UK
-1
-2
-3
USA
-4
-5
1970
1975
1980
1985
1990
1995
2000
The Balance of Payments Account
• The capital account
UK balance of payments: 2001 (£ millions)
CAPITAL ACCOUNT
5. Net capital transfers
+1 439
Capital account balance
FINANCIAL ACCOUNT
6. Investment (direct and portfolio)
a) Net investment in UK from abroad
b) Net UK investment abroad
Balance of direct and portfolio
7. Other financial flows (mainly short-term)
a) Net deposits in UK from abroad and
borrowing by UK residents
b) Net deposits abroad by UK residents and UK
lending to overseas residents
Balance of other financial flows
8. Reserves (drawing on +, adding to –)
Financial account balance
+1 439
+ 75 496
118 750
–41 254
+219 087
161 063
+58 024
+3 085
+19 855
The Balance of Payments Account
• The capital account
• The financial account
The Balance of Payments Account
• The capital account
• The financial account
– investment
The Balance of Payments Account
• The capital account
• The financial account
– investment
• direct
The Balance of Payments Account
• The capital account
• The financial account
– investment
• direct
• portfolio
UK balance of payments: 2001 (£ millions)
CAPITAL ACCOUNT
5. Net capital transfers
+1 439
Capital account balance
FINANCIAL ACCOUNT
6. Investment (direct and portfolio)
a) Net investment in UK from abroad
b) Net UK investment abroad
Balance of direct and portfolio
7. Other financial flows (mainly short-term)
a) Net deposits in UK from abroad and
borrowing by UK residents
b) Net deposits abroad by UK residents and UK
lending to overseas residents
Balance of other financial flows
8. Reserves (drawing on +, adding to –)
Financial account balance
+1 439
+ 75 496
118 750
–41 254
+219 087
161 063
+58 024
+3 085
+19 855
The Balance of Payments Account
• The capital account
• The financial account
– investment
• direct
• portfolio
– other financial flows (mainly short term)
UK balance of payments: 2001 (£ millions)
CAPITAL ACCOUNT
5. Net capital transfers
+1 439
Capital account balance
FINANCIAL ACCOUNT
6. Investment (direct and portfolio)
a) Net investment in UK from abroad
b) Net UK investment abroad
Balance of direct and portfolio
7. Other financial flows (mainly short-term)
a) Net deposits in UK from abroad and
borrowing by UK residents
b) Net deposits abroad by UK residents and UK
lending to overseas residents
Balance of other financial flows
8. Reserves (drawing on +, adding to –)
Financial account balance
+1 439
+ 75 496
118 750
–41 254
+219 087
161 063
+58 024
+3 085
+19 855
The Balance of Payments Account
• The capital account
• The financial account
– investment
• direct
• portfolio
– other financial flows (mainly short term)
– flows to and from reserves
UK balance of payments: 2001 (£ millions)
CAPITAL ACCOUNT
5. Net capital transfers
+1 439
+1 439
Capital account balance
FINANCIAL ACCOUNT
6. Investment (direct and portfolio)
a) Net investment in UK from abroad
b) Net UK investment abroad
Balance of direct and portfolio
7. Other financial flows (mainly short-term)
a) Net deposits in UK from abroad and
borrowing by UK residents
b) Net deposits abroad by UK residents and UK
lending to overseas residents
Balance of other financial flows
8. Reserves (drawing on +, adding to –)
Financial account balance
+ 75 496
118 750
–41 254
+219 087
161 063
+58 024
+3 085
+19 855
The Balance of Payments Account
• The capital account
• The financial account
– investment
• direct
• portfolio
– other financial flows (mainly short term)
– flows to and from reserves
– financial account balance
UK balance of payments: 2001 (£ millions)
CAPITAL ACCOUNT
5. Net capital transfers
+1 439
Capital account balance
FINANCIAL ACCOUNT
6. Investment (direct and portfolio)
a) Net investment in UK from abroad
b) Net UK investment abroad
Balance of direct and portfolio
7. Other financial flows (mainly short-term)
a) Net deposits in UK from abroad and
borrowing by UK residents
b) Net deposits abroad by UK residents and UK
lending to overseas residents
Balance of other financial flows
8. Reserves (drawing on +, adding to –)
Financial account balance
+1 439
+ 75 496
118 750
–41 254
+219 087
161 063
+58 024
+3 085
+19 855
The Balance of Payments Account
• The capital account
• The financial account
– investment
• direct
• portfolio
– other financial flows (mainly short term)
– flows to and from reserves
– financial account balance
• Overall balance of payments
UK balance of payments: 2001 (£ millions)
TOTAL CURRENT + CAPITAL + FINANCIAL ACCOUNTS
Total current account
–17 440
Total capital account
+1 439
Total financial account
Total current + capital + financial accounts
9. Net errors and omissions
Overall balance of payments
+19 855
+3 854
–3 854
0
UK balance of payments: 2001 (£ millions)
TOTAL CURRENT + CAPITAL + FINANCIAL ACCOUNTS
Total current account
–17 440
Total capital account
+1 439
Total financial account
Total current + capital + financial accounts
9. Net errors and omissions
Overall balance of payments
+19 855
+3 854
–3 854
0
The Balance of Payments Account
• The capital account
• The financial account
– investment
• direct
• portfolio
– other financial flows (mainly short term)
– flows to and from reserves
– financial account balance
• Overall balance of payments
• Assessing balance of payments figures