BALANCE OF PAYMENT

1. BALANCE OF PAYMENT by Shalini

2. Trade: Exchange of goods and services with other nations. • Export Goods and services sold to other countries • Import Goods and services bought from other countries

3. In addition, trading involve exchange of Visible and invisible goods • Visible goods: Are the material goods exported and imported. • Invisible products: Are the non merchandise item.

4. Balance of Trade • It is the difference between the monetary value of exports and imports in an economy over a certain period of time (only visible goods).

5. Balance Of Payment • Balance of payment takes into account both the invisible and visible items.

6. Components Of BOP • Current Account • Capital Account

7. Current Account • The current account refers to balance in flow of goods and services and other current receipts and payments.

8. Capital Account • Export and Import of capital and the difference between the two represent countries capital account balance Eg Foreign investment and loans

9. BOP Disequilibrium-Factors Disequilibrium occurs due to deficit and surplus. • Economic factors • Political Factors • Social Factors

10. CONCLUSION Balance of payment represents a better picture of a country’s economic and financial transaction with the rest of the world.

11. Reference • International Business Environment by Francis Cherunilam • Macroeconomic Policy Environment by Shyamal Roy