Current account of the balance of payments
Introduced| English | Meaning |
|---|---|
| balance of payments/ˈbæləns ɒv ˈpeɪmənts/ | A record of economic transactions between an economy's residents and the rest of the world over a period. |
| current account/ˈkʌrənt əˈkaʊnt/ | The part of the balance of payments recording trade in goods and services, primary income and secondary income. |
| exports/ˈekspɔːts/ | Goods and services sold to buyers in other countries. |
| imports/ɪmˈpɔːts/ | Goods and services bought from sellers in other countries. |
| deficit/ˈdefɪsɪt/ | The amount by which outgoings exceed incomings in a specified budget or account over a period. |
| surplus/ˈsɜːpləs/ | An amount exceeding what is required; in a market, quantity supplied above quantity demanded at a given price. |
| competitiveness/kəmˈpetɪtɪvnəs/ | The ability of a business or economy to attract buyers and succeed relative to alternatives. |
A country's spending diary
- Just as a household tracks money in and out, a country records every payment to and from the rest of the world.
- The record is the balance of payments 国际收支, and its heart is the current account 经常账户.
Current account flow
Track exports, imports and income flows into the current account.
Which are part of the current account? (Select all that apply.)
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The current account covers goods, services, income and transfers.
What's in the current account
- Trade in goods: exports 出口 and imports 进口 of physical products.
- Trade in services: tourism, banking, shipping.
- Income (from investments abroad) and transfers (aid, remittances).
A floating exchange rate and a depreciation
A country exports 120 and imports 150 of goods and services. What is the deficit?
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150 − 120 = 30 deficit.
A current-account surplus means a country:
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A surplus means receipts exceed payments.
When a country imports more than it exports overall, its current account is in ______.
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Payments exceed receipts.
Deficit 赤字 and surplus 过剩
- A deficit: the country pays out more than it earns (imports > exports, broadly).
- A surplus: it earns more than it pays out.
Worked example. A country exports 80 of goods and services but imports 100. Its current account shows a deficit of 20 — it is buying more from abroad than it sells.
Exports above imports is a surplus; below is a deficit
A large, persistent current-account deficit must be financed by borrowing or selling assets.
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It cannot continue indefinitely without funding.
Why it matters
- A large, lasting deficit must be funded by borrowing or selling assets — not sustainable forever.
- Causes include low competitiveness 竞争力, a strong currency, or high domestic demand for imports.
A deficit isn't automatically "bad". A growing economy may import heavily for a while. The worry is a large, persistent deficit that has to be financed by ever more borrowing.
You've got it
- the current account records trade in goods and services, plus income and transfers
- a deficit = paying out more than earning; a surplus = the reverse
- a large, persistent deficit is the real concern — it must be financed