Current account transactions refer to all economic transactions that involve the exchange of goods, services, income, and unilateral transfers between a country and the rest of the world during a specific period, usually one year. These transactions are recorded in the current account of the balance of payments (BoP).
Current account transactions:
- Export and import of goods (visible trade).
- Export and import of services (invisible trade), such as banking, insurance, shipping, and tourism.
- Income receipts and payments such as interest, dividends, and profits.
- Unilateral transfers like remittances, gifts, and donations.
In summary, current account transactions reflect a country’s day-to-day economic dealings with the world, excluding capital transactions like borrowing or lending.
