Understanding the Basics : What Is the Balance of Payments
So, what exactly is the balance of payments? Well, think of it as the financial report card for a country. Just like you track your income and expenses to see how your personal finances are doing, countries do something similar on a much larger scale. The balance of payments is a comprehensive record of a country’s economic transactions with the rest of the world. It covers everything from the goods and services a country exports and imports to financial investments, like foreign direct investments and portfolio investments.