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Economics vocabulary · Trade and Exchange Rates

Balance of payments

Meaning in economics, with examples

nounCommon term

In economics, balance of payments means: A record of all money flows between a country and the rest of the world over a period, divided into the current account and the capital and financial account.

In Turkish: ödemeler dengesi

How it is used

Compiled by central banks following IMF standards. In theory it always balances: a current account deficit is matched by net inflows in the financial account, such as foreign investment or borrowing. A balance of payments crisis happens when a country can no longer finance its deficit.

Example sentences

  1. The balance of payments data show that foreign investors bought more government bonds in July.

  2. The country turned to the IMF during a balance of payments crisis.

Common collocations

  • balance of payments data
  • balance of payments crisis
  • balance of payments statistics
  • capital and financial account
  • current account deficitA shortfall that arises when a country pays more to the rest of the world for goods, services, income and transfers than it receives.
  • trade deficitThe gap that appears when the value of a country's imports of goods, and sometimes services, is greater than the value of its exports over a period.
  • foreign direct investmentInvestment by a company from one country that gives it a lasting interest and control in a business in another country, such as building a factory.
  • exchange rateThe price of one currency expressed in another, for example how many Turkish lira you need to buy one US dollar or one euro.

More terms: Trade and Exchange Rates

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This page explains English vocabulary for learners. It is not financial advice.