Structure of the current account of the balance of payments

There are three elements to the balance of payments. These are the current account, the capital and financial account and net errors and omissions.

They are: trade in goods, trade in services and income and current transfers.

Trade in goods

Sometimes referred to as the visible balance, measures the earnings gained from exports and the expenditure spent on imports of products.

The trade in services

It is identical to the trade in goods except that it concerns exports and imports of services, the invisible balance. These include products such as insurance and tourism.

Income and transfers

It is the transfer of money from government and individuals internationally. This may arise from individuals setting up bank accounts in other countries or immigrants sending incomes back to relatives in their origin countries.

Current-account

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2 thoughts on “Structure of the current account of the balance of payments

  1. i would personally recommend you to update your iGCSE Economics notes to the 2016 syllabus as it would seem versatile to group of people studying for their iGCSE examinations as some of the requirements in this section of balance of trade are seemed to be missing. those missing topics include:
    • describe methods of trade protection
    • discuss the merits of free trade and protection.
    • discuss the causes and consequences of current account deficits and surpluses

    • Thanks for your comment. This topic is about the structure of the current account of the balance of payment. Trade protection and the other topics you stated are no doubt in the unit ‘International Trade’. But they don’t come in this specific topic on this page.

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