Balance of Payments (BOP)

Also known as Balance of International Payments, this refers to all of the economic transactions conducted by a country within a given period by individuals, companies and the government itself.

BOP is an important economic indicator because a country’s balance of payments reveals a great deal about it, from the demand for its national currency and its suitability as a trading partner to how economically competitive it is on the world stage.

Unlike trade balance figures, which often show a deficit or surplus, BOP should always sum to zero when all transactions (goods, services, capital, transfers etc.) are included.