The Balance of Payments

The Balance of Payments (BOP) is a financial record that summarizes a country's economic transactions with the rest of the world over a specific period, usually a year. It includes imports and exports of goods and services, financial investments, and remittances. The BOP has two main components: the current account, which tracks trade and services, and the capital account, which tracks investments. A surplus indicates that a country earns more from its foreign transactions than it spends, while a deficit shows it spends more than it earns. It helps economists understand a country's economic health and international relationships.