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Balance of Payments

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Abstract

The world economy, led by the buoyant economic activity in emerging economies, is gradually recovering from the crisis. The risks however remain, as advanced economies face large fiscal deficit, high public debt and unemployment levels and tepid aggregate demand, leading to subdued growth. The sovereign debt crisis in the peripheral euro-zone countries is contributing to the uncertainty. At the same time, large capital flows to emerging economies, rising oil and agricultural prices are fueling inflationary pressures that may affect the nascent global recovery. In the backdrop of these developments, the Indian economy continues to exhibit resilience, moving steadily towards the pre-crisis growth path. The current account deficit, however, has widened due to robust import demand and lower invisibles surplus. These are being largely financed by the relatively higher capital flows, leading to moderate accretion in reserves. There are, however, challenges that include volatile nature of foreign institutional investment that is characterized by surge and reversal of capital flows, deceleration in foreign direct investment and the risk of further slowdown in advanced economies that may affect exports and strain balance of payments.

Suggested Citation

  • N/A, 2011. "Balance of Payments," Foreign Trade Review, , vol. 45(4), pages 73-104, January.
    • Handle: RePEc:sae:fortra:v:45:y:2011:i:4:p:73-104
    DOI: 10.1177/0015732515110404
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    Cited by:

    1. Camarero, Mariam & Carrion-i-Silvestre, Josep Lluís & Tamarit, Cecilio, 2013. "Global imbalances and the intertemporal external budget constraint: A multicointegration approach," Journal of Banking & Finance, Elsevier, vol. 37(12), pages 5357-5372.
    2. Schrader, Klaus & Laaser, Claus-Friedrich, 2012. "Die Krise in Südeuropa oder die Angst vor dem Dominoeffekt: Griechenland, Portugal und Spanien im Krisentest," Kiel Discussion Papers 500/501, Kiel Institute for the World Economy (IfW Kiel).
    3. Arregui, Iñigo & Salvador, Beatriz & Vázquez, Carlos, 2017. "PDE models and numerical methods for total value adjustment in European and American options with counterparty risk," Applied Mathematics and Computation, Elsevier, vol. 308(C), pages 31-53.
    4. Förster, Marcel & Jorra, Markus & Tillmann, Peter, 2014. "The dynamics of international capital flows: Results from a dynamic hierarchical factor model," Journal of International Money and Finance, Elsevier, vol. 48(PA), pages 101-124.
    5. André Grjebine, 2013. "L'Eurosystème: un mécanisme de transferts en faveur des pays déficitaires ? Le débat," Post-Print hal-01024818, HAL.
    6. repec:bas:econth:y:2012:i:1:p:3-26 is not listed on IDEAS
    7. Leif Andersen & Darrell Duffie & Yang Song, 2017. "Funding Value Adjustments," NBER Working Papers 23680, National Bureau of Economic Research, Inc.
    8. Burak Saltoðlu & Devrim Yýlmaz, 2013. "Why is it so Difficult and Complex to Solve the Euro Problem?," Working Papers 2013/02, Bogazici University, Department of Economics.
    9. Junbeom Lee & Chao Zhou, 2017. "Binary Funding Impacts in Derivative Valuation," Papers 1703.00259, arXiv.org, revised Aug 2020.
    10. Ibrahim Sirkeci & Jeffrey H. Cohen & Dilip Ratha, 2012. "Migration and Remittances during the Global Financial Crisis and Beyond," World Bank Publications - Books, The World Bank Group, number 13092.
    11. repec:bas:econth:y:2012:i:1:p:27-48 is not listed on IDEAS
    12. Teng, Faxin & Meier, Claudia & Kamenev, Dmitry & Klein, Martin, 2011. "Trade integration,restructuring and global imbalances --A tale of two countries," MPRA Paper 31946, University Library of Munich, Germany.
    13. Rosaria Rita Canale, 2015. "Fiscal Adjustment in Times of Crisis: The Case of the Euro-Area," International Journal of Financial Markets, Research Academy of Social Sciences, vol. 1(1), pages 8-17.

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