The balance of payments records transactions between residents and non-residents over a period. The current account covers goods, services, primary income and secondary income. The goods trade balance is a narrower measure.
Goods exports less imports produce a merchandise trade balance. Economies also trade services, earn and pay income from work and capital, and make transfers. Those flows can substantially change the current-account result. A goods surplus does not guarantee a current-account surplus.
Assume balances of +3 billion for goods, −1 billion for services, −2.5 billion for primary income and +0.2 billion for secondary income, all in one currency. The current account is −0.3 billion. A positive goods balance thus coexists with a current-account deficit. These are illustrative figures, not Azerbaijani observations.
| Component | Balance |
|---|---|
| Goods | +3.0 |
| Services | −1.0 |
| Primary income | −2.5 |
| Secondary income | +0.2 |
| Current account | −0.3 |
The financial account records transactions in external financial assets and liabilities. The capital account has a separate, narrower meaning. Money arriving from abroad is not necessarily export revenue: a loan and an equity investment have different economic roles. The account names should not be used interchangeably.
Customs statistics and balance-of-payments statistics can differ in coverage, valuation and recording time. Goods data in the balance of payments may include adjustments to customs observations. A mismatch is not automatic proof of error; compare methods and periods first.
Identify the account, sign, currency and period: a quarter or a year-to-date total. A current-account deficit is not a government budget deficit. Assessing sustainability requires causes, financing and the composition of external liabilities. One positive or negative balance cannot establish the health of the whole economy.
No. In the balance of payments, current account is a macroeconomic category of external transactions.
No. Other external transactions and valuation changes also affect reserves.
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