The following table shows the BOP for a hypothetical country.
Item of the BoP | Net Balance ($ billion) | Comment |
Current Account | ||
(A) Balance of trade in goods | -20 | There is a trade deficit in goods. |
(B) Balance of trade in services | +10 | There is a trade surplus in services. |
(C) Net investment income | -12 | Net outflow of income, i.e., due to profits of international corporations |
(D) Net overseas transfers | +8 | Net inflow of transfers, say, from remittances from non-resident citizens |
Adding A+B+C+D = Current account balance | -14 | Overall, the nation runs a current account deficit |
Financial Account | ||
Net balance of FDI flows | +5 | Positive FDI net inflow |
Net balance of portfolio investment flows | +2 | Positive net inflow into equity markets, property etc. |
Net balance of short term banking flows | -2 | Small net outflow of currency from nation’s banking system |
Balancing item | +2 | There to reflect errors and omissions in data calculations |
Changes to reserves of gold and foreign currency | +7 | (Means that gold and foreign currency reserves have been reduced |
Overall balance of payments | 0 |