The extract from a country's balance of payments account is shown below Item Imports ($...
The extract from a country's balance of payments account is shown below
| Item | Imports ($ million) | Export ($) |
| Agricultural products | - | 200 |
| Mineral products | - | 300 |
| Consumer goods | 250 | - |
| Capital goods | 400 | - |
| Insurance | 50 | 25 |
| banking | 75 | 30 |
| Transportation | 85 | 25 |
| Loans | 150 | 60 |
Using the table above, calculate the:
(a) balance of trade
(b) invisible trade balance
(c) balance on current account
Explanation
(a) Balance of trade = visible exports - visible imports
Visible exports = $200.00 + $300.00
= $500.00 million
Visible imports = $250.00 + $400.00
= $650.00 million
Balance of trade = $500.00 - $650.00
= $150.00 million
(b) invisible trade balance of trade = invisible exports - invisible imports
Invisible exports = $25.00 + $30.00 + $25.00
$80.00 million
Invisible imports = $50.00 + $75.00 + $85.00
= $210.00 million
invisible trade balance = $80.00 - $210.00 = - $130.00
(c) Balance on current account = balance of trade + invisible trade balance
= -$150.00 +(- $130.00)
= -$150.00 + $130.00
= - $280.00
OR
Total exports - Total imports
$(200 + 300 + 25 + 30 + 25) - $(250 + 400 + 50 + 75 + 85)
= $580 - $860
= - $280