Balance of payments is an important indicator of the economy’s growth in the certain country. It is formed by the comparison of the amount of funds that come from abroad with the amount of funds that are directed for the settlement with other countries.
The calculation of this indicator includes all payments that are directed not only to the budgets of other states, but also to the different international organizations. Balance is divided into active and passive. Active balance is formed when the amount of payments received by a country exceeds the amounts that leave the country. In the opposite case, the balance of payments is considered passive.
Investors follow the values of this economic indicator thoroughly because it is very important in terms of the national economy growth. For example, when the country has an active balance of payments, we can say that the prosperity has grown, and it will cause the growth of the national currency too. That growth can start very soon and last for a very long time.