strsubcodechain Balance of Payments - Data and Methods
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Subjects > Balance of Payments

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Subject: Balance of Payments BPM6

Name of collection/source
The balance of payments statistics are derived from a combination of direct business enterprise /establishment surveys conducted by the source and other government agencies, and other sources such as banks' international transaction reporting systems (ITRS) and customs clearance data (administrative data).

Source Periodicity
Data are compiled quarterly (and in some cases monthly) on a transactions basis.

Key statistical concept
The balance of payments is a statistical statement that provides a systematic summary of economic transactions of an economy with the rest of the world, for a specific time period. The transactions are for the most part between residents and non-residents of the economy. A transaction is defined as an economic flow that reflects the creation, transformation, exchange, transfer, or extinction of economic value and involves changes in ownership, of goods or assets, the provision of services, labour or capital.

Countries compile balance of payments statistics in accordance with the 6th edition of the Balance of Payments and International Investment Position Manual published by the IMF (BPM6). The transactions included comprise: the goods and services accounts; the primary income account; the secondary income account; the capital account; and the financial account.

Changes from BPM6 to BPM5 were often a consequence of a stricter application of the change of ownership principle in particular in the goods and services accounts. They relate to transactions on goods and services (merchanting, goods for processing, insurance), income (investment income), and financial operations (direct investment).

Seasonal adjustment
Current account time series are seasonally adjusted by OECD using the TRAMO-SEATS method. The procedure is indirect, that is the component credits and debits series are adjusted individually and the totals and balances are then derived by summing the components. The procedure also uses an option which ensures that the seasonally adjusted quarterly figures sum to the corresponding unadjusted annual data.

Recommended uses and limitations
Balance of payments statistics are used as a key economic indicator due to the close relationship between domestic economic and external developments. This relationship has strengthened over the last two decades with the growing interdependence of the world's economies. Balance of payments and related trade and financial statistics are used by agencies responsible for the formulation of policy on issues such as causes of payments imbalances, adjustment measures, merchandise trade, trade in services, financial flows, financial stability and foreign direct investment, etc. In principle as part of a double entry accounting system the balance of payments should balance, but as the components are independently derived from (many) different sources, they do not in practice balance. The residual imbalance is described by the term "net errors and omissions".

Subject: Financial Account

Key statistical concept
In the financial account, for net values, a positive sign indicates a net (in)flow from the domestic economy to the rest of the world (i.e. a lending to the rest of the world) and a negative sign, a net (out)flow from the rest of the world to the domestic economy (i.e. a net borrowing from the rest of the world). At the level of the sub items (investment abroad investment; in the reporting economy etc.), a positive sign indicates an increase of the sub item under consideration and a negative sign a decrease. These conventions are imposed by the BPM6.