Country X recorded the following international transaction figures for a given financial year:
| Transaction Item | Value (\$ million) |
|---|---|
| Exports of goods | 650 |
| Imports of goods | 820 |
| Net receipts from services and invisibles | 110 |
| Net unrequited transfers | -30 |
| Net capital account inflows | 80 |
Calculate the magnitude of Country X's overall balance of payments deficit in millions of US dollars.
Answer: 10 million dollars
Answer
The magnitude of the overall balance of payments deficit is 10 million dollars.
The overall balance of payments position represents the sum of the current account balance and the capital account balance. The current account balance is calculated as the merchandise trade balance ( 820 million = - 110 million) plus net unrequited transfers (- 90 million. Adding the net capital account inflow of 10 million. Therefore, the magnitude of the balance of payments deficit is 10 million dollars.
Step-by-Step Solution
Key Concept
Overall Balance of Payments Disequilibrium Calculation