What Is a Current Account Surplus?

The current account is an account that records production, income distribution, redistribution, and income usage, and specifically includes production accounts, income distribution, and usage accounts. Accounts are linked by balance terms. The current account reflects production, income distribution, redistribution, and use of disposable income in final consumption and savings. According to the SNA's specifications, savings come from domestic and foreign production, which are not used for final consumption, and constitute a source of accumulation. ^[1]

Current account

A current account, or "cash account", is a country

The cash account (Current Account, or "cash item") is a frequently occurring international economic transaction and is the most basic and important account. Including goods (goods), services (services), income (income) and current transfers (current transfers) four items.

A cash account (that is, a "cash item"), as opposed to a capital and financial account, refers to the flow of funds from trade and services in the balance of payments. This part is therefore regarded as a more reasonable flow of funds.

The current account in the balance of payments is the sum of trade balances (exports of goods and services minus imports), minus factor income (such as interest and dividends), and then transfer payments (such as foreign aid). The current account surplus (surplus) increases the corresponding amount of net foreign capital in a country; the current account deficit (deficit) is just the opposite.

Trade balances are typically the most important part of a cash account. In other words, changes in trade conditions are the main factors affecting cash accounts. However, for those few countries with large overseas assets and liabilities, net factor payments may play a significant role.

Together with changes in cash accounts, capital accounts, financial accounts, and official reserves, a sum of zero constitutes the definition of an account. This sum is called the balance of payments. Generally speaking, changes in official reserves are very small