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Balance of payments
Australias economic transactions with the rest of the world are entered in a set of double entry accounts which make up the balance of payments. It is the use of the double entry system that enables balances to be derived, but the balance of payments cannot be summarised in just a single balance. ... These capital and financial inflows are measured in the capital and financial account of the balance of payments. The balance on the capital and financial account in a period is, in principle, equal and offsetting to the deficit on the current account of the balance of payments in that period. ... he balance on current account is the sum of the balances on goods trade, services trade, income and current transfers. ...
The balance on current account consists of:
• Balance on goods and services: the difference between the total credit (export) value and the total debit (import) value of goods and services. Within the balance on goods and services there is a net services balance and a net goods balance;
• Net income: the difference between the value of income, such as dividends and interest, earned by residents from non-residents (credits) and that earned by non-residents from residents (debits); and
• Net current transfers: the difference between current transfer credits and debits. ...
Capital account
The balance on capital account, in original terms, usually records a surplus, largely the result of Australias net migration. ...
The balance on capital account is the sum of net capital transfers and net acquisition/disposal of non-produced, non-financial assets. ...
Financial account
The balance on the financial account, in original terms, changes markedly from quarter to quarter. This volatility reflects, in part, the huge gross flows which underlie the balance on financial account and the difficulties associated with recording them in the correct time period. ... As Australia usually has a current account deficit, the balance on the financial account usually records a surplus (or net inflow). ... The June 2002 quarter recorded a financial account balance net inflow of $8,008m. ...
A positive financial account balance (a net inflow) occurs when the increase in Australias liabilities to foreign countries (or the reduction in claims on foreign countries) in a period exceeds the increase in Australias claims on foreign countries (or the reduction in liabilities to foreign countries).
Approximate Word count = 1784
Approximate Pages = 7.1
(250 words per page double spaced)
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