South Africa Current Account % of Gross Domestic Product (GDP)

Balance of payments is a set of accounts recording all economic transactions between the residents of the country and the rest of the world in a given period of time, usually one year. Payments into the country are called credits,payments out of the country are called debits. There are three main components of a balance of payments: - current account - capital account - financial account. Either a surplus or a deficit can be shown in any of these components. Current account records the values of the following: - trade balance exports and imports of goods and services - income payments and expenditure interest, dividends, salaries - unilateral transfers.It shows how a country deals with the global economy on a non-investment basis. Balance of payments shows strengths and weaknesses in a country's economy an therefore helps to achieve balanced economic growth. The release of a balance of payments can have a significant effect on the exchange rate of a national currency against other currencies. It is also important to investors of domestic companies that depend on exports. Positive current account balance is when inflows from its components into the country exceed outflows of the capital leaving the country. Current account surplus may strengthen the demand for local currency. Persistent deficit may lead to a depreciation of a currency.