Bjorg Dahl

Hello Teresa! Balance of payments is the overall record of all economic transactions of a country with the rest of the world.Balance of trade is the difference in the value of exports and imports of only visible items. Balance of trade includes imports and exports of goods alone i.e., visible items. On the other hand, balance of payments includes: - Imports and exports of goods; - Imports and exports of services; - Capital transfers. Balance of trade of a country can be favorable or unfavorable but BoP always balances. BoP is important than balance of trade because BoP offers a comprehensive picture of the country's economic status.