Question

Mention two invisible items in the balance of the payments of a country.

Mention the main invisible items in the balance of payments.

Answer 1

Invisible services include banking, shipping, tourism, investment, and one-way transfers, among other services.

Answer 2

Invisible items refer to transactions that do not involve the movement of physical goods across borders. These are mainly services, incomes, and transfers. Two important examples of invisible items are

• Export and Import of Services – For example, payments for shipping, insurance, banking, and tourism services.
• Investment Income – This includes earnings like interest, dividends, and profits on foreign investments.
• Unilateral transfers – Unilateral transfers received from and paid to other countries without any service in return in the current period, like gifts, donations, etc.

These items are recorded in the current account of the balance of payments under the category of invisibles.