Relating the Balance of Payments to the Macroeconomy

Relating the Balance of Payments to Open-economy Macro Categories

BoP categories	Simplified BoP for macro diagrams
Current Account
Exports source of foreign exchange (+)	Exports (X)	Trade Balance (X - M)
Imports use of foreign exchange (-)	Imports (M)	Trade Balance (X - M)
Private Transfers	(ignored)
Official Transfers	(ignored)
Income	(ignored)
Financial Account
Foreign Direct Investment (foreigners’ new purchase of ownership stakes in our country, or our sale of previously-acquired stakes in foreign enterprises) source of foreign exchange (+)	Gross Foreign Saving (GFS) (sources of foreign exchange)	Net Foreign Saving (GFS - GFI)
Portfolio Investment (foreigners’ new purchase of financial securities in our country, or our sale of previously-acquired foreign financial securities) source of foreign exchange (+)
Other investment (including foreigners’ new loans to us, or their repayments of (principal on) old loans from us.) source of foreign exchange (+)
Foreign Direct Investment (our new purchase of ownership stakes abroad, or foreigners’ sale to us of previously-acquired stakes in our enterprises) use of foreign exchange (-)	Gross Foreign Investment (GFI) (uses of foreign exchange)
Portfolio Investment by (our new purchase of financial securities abroad, or foreigners’ sale of previously-acquired domestic financial securities to us) use of foreign exchange (-)
Other investment (including our new loans to foreigners, or our repayments of (principal on) old loans from foreigners.) use of foreign exchange (-)
Changes in Reserves	(ignored)
Errors and Omissions	(ignored)