Definition of balance of payments

Statement of a country's net financial transactions with other countries. This is normally broken down into the current account, which includes the visible balance of trade (the net difference between exports and imports of merchandise goods) and the invisible trade balance (payments and receipts for services such as shipping, banking and tourism); and the capital account, which measures the inflow and outflow of short-term and long-term capital (such as direct investment; income from securities, property, etc.). The visible and invisible trade balances, current account and capital account can be either in surplus (exports are larger than imports) or deficit (imports are larger than exports), but in principle there should be no surplus or deficit in the overall balance of payments.