Final answer:
The balance of trade is calculated by subtracting imports from exports. The current account also includes net income and transfers, and along with the capital account, composes the official settlement balance. These figures indicate whether a country is a net lender or borrower.
Step-by-step explanation:
To calculate the balance of trade in goods and services for a country, you subtract the total value of imports from the total value of exports. If exports exceed imports, the country has a trade surplus; conversely, if imports exceed exports, it has a trade deficit. The current account balance includes the trade balance along with net income from abroad and net current transfers. It represents the total inflows minus outflows of goods, services, primary income, and secondary income transactions with the rest of the world.
The capital account balance represents the net change in foreign ownership of domestic assets, which includes transactions such as real estate, stocks, and bonds. The current account balance plus the capital account balance equals the official settlement balance (or balance of payments), which is a summary of all international transactions. A country is considered a net lender if it has more inflows than outflows, and a net borrower if the reverse is true.
When calculating, use the available data for exports and imports of goods and services, income payments and receipts, and unilateral transfers to determine the current account balance. For the capital and financial accounts, use data on investment flows and transfers of financial capital.