Question

Explain the expected changes of the main items in the balance of payments after Covid 19.

Answer 1

Balance of payment of a country refers to the annual financial statement of all the economic transactions between the country and the rest of the world .Covid - 19 will cause significant impact on the balance of payment of a country. All the important items of balance of payment will be subjected to Change. However the severity of the situation will depend on the duration of the corona pandemic and lock down.

Let's look have a look at the changes , which may happen.

* Changes with respect to current account.

Current account represents the transactions in goods and services.

> Exports will experience a dall due to Falk in production as well as the restrictions imposed by other countries.

> Imports will also experience a decline as due to the restrictions imposed by the country.

* changed with respect to capital account.

Capital account records the capital inflow and outflow between the nation and the rest of the world.

> volume of Capital outflows as well as capital inflows will fall , at least for a certain period of time due to the uncertainty and fluctuations caused in the financial markets by the corona pandemic.

* changes with respect to official reserves account

Official reserves of the nation will decline due to fall in the amount of payments received from other nations in various forms.

Thus,volume of grade as well as value of trade will decline after covid,-19