All international
transactions are recorded in a country's balance of payments statistics. The
ideal situation represens a position where over a number of years one nation spends and invests no more than other nations spend or invest in it.
Obviously, economic transactions with other nations can occur on many levels, and for accounting purposes these transactions are often grouped into three catagories, namely current account, capital account and official financing. Of these three, the most widely quoted is the current account transactions. This involves all transactions relating to the exchange of visible goods (such as manufactured items), the exchange of invisibles (such as services) and investment earnings (such as profits from abroad). Clearly, therefore, in any one year, one nation's balance of payments deficit is another nation's balance of payments surplus - ultimately, however, in the long run debts must be paid.