The balance of payments (BOP) is a set of accounts that record a country's international transactions, and which (because double entry bookkeeping is used) always balance out with no surplus or deficit shown on the overall basis. A surplus or deficit, however, can be shown in any of its three component accounts: (1) Current account, covers export and import of goods and services, (2) Capital account, covers investment inflows and outflows, and (3) Gold account, covers gold inflows and outflows. BOP accounting serves to highlight a country's competitive strengths and weaknesses, and helps in achieving balanced economic-growth.
Balance of Trade
Balance of Trade (BOT) is the difference between the monetary value of exports
and
imports of a specific country's economic output over a certain period of time. It is one of many economic fundamentals
that affect the relative value of a country's currency. A positive or favorable balance of trade is known as a trade surplus when exports exceed imports. Conversely, a negative or unfavorable balance is referred
to
as a trade deficit or trade gap.
The
BOT is also part of
a nation's current account,
which
includes income from the international investment positions, as well
as international aid and
other cross-border transactions.