Current account – definition

The current account records the payments for goods and services, plus investment income and transfers, between an economy and the rest of the world. Payments coming into an economy are called credits and payments leaving an economy are called debits.

The current account is considered the most significant account for an economy, although it does not include investment flows, and hence does not measure all financial flows between countries – which are included in the overall ‘balance of payments’.

If the current account does not balance it is either a current account deficit – where credits are less than debits – or is in surplus – where credits are greater than debits.