The current account is a component of the balance of payments. It records a country’s transactions in goods, services, primary income, and secondary income with the rest of the world over a specific period.

Key components:

• Trade in goods (visible trade): physical goods such as machinery, textiles, and agricultural products
• Trade in services (invisible trade): services including transportation, tourism, financial services, and consulting
• Primary income: returns from factors of production such as wages, profits, dividends, and interest
• Secondary income: transfers such as foreign aid, remittances, and gifts

Balance states:

• Surplus: when total credits exceed total debits (exports > imports)
• Deficit: when total debits exceed total credits (imports > exports)

The current account balance (CAB) is calculated as:

CAB = (Exports of goods − Imports of goods) + (Exports of services − Imports of services) + (Primary income received − Primary income paid) + (Secondary income received − Secondary income paid)