What is the impact of the balance of payments deficit?

Balance of payments deficit.

Also known as the balance of payments deficit.

It refers to the fact that a country spends more than it earns in the balance of payments.

Balance of Payments Deficit Domestic Impact:

If the balance of payments deficit is caused by a current-account deficit, it will inevitably lead to a reduction in employment opportunities in export-related sectors, leading to an economic downturn.

If the deficit in the balance of payments is caused by a deficit in the financial and asset accounts, it means a large capital outflow, a shortage of domestic funds, and a rise in interest rates, leading to an increase in unemployment and a downturn in the economy.

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The balance of payments deficit is one of the common bottlenecks in developing countries. A balance of payments deficit, also known as a balance of payments deficit, is when a country spends more than it earns in the balance of payments.

The balance of payments deficit will lead to a decrease in the supply of foreign exchange in the domestic foreign exchange market and an increase in demand, which will make the exchange rate of foreign exchange **, the exchange rate of the local currency**. If the country takes steps to intervene, that is, sell foreign currency and buy its own currency, it must have sufficient foreign exchange reserves in hand, which will further lead to the depreciation of the local currency. The intervention will directly lead to a decrease in the amount of the national currency, which in turn will lead to an increase in the level of domestic interest rates, leading to a decline in the economy and an increase in unemployment.

From the perspective of the causes of the balance of payments deficit, if the balance of payments deficit is caused by the current account deficit, it will inevitably lead to a reduction in employment opportunities in export-related sectors and a decline in the economy. If the deficit in the balance of payments is caused by a deficit in the capital account, then it means a large capital outflow, a shortage of domestic funds, which pushes the level of interest rates up, leading to an increase in unemployment and a downturn in the economy.

The adverse consequences of the balance of payments surplus are mainly as follows: the balance of payments surplus is too large, resulting in an increase in foreign exchange in the domestic foreign exchange market, and the local currency will face the pressure of appreciation; The appreciation of the local currency will increase the pressure on exports.

If the first person intervenes, it will lead to an increase in the amount of the national currency, leading to inflation; When domestic prices rise, it inevitably leads to difficulties in exporting domestic goods.

The surplus in the balance of payments caused by a large surplus of the balance of payments will inevitably be retaliated against by the first partner, causing the first friction. At the same time, economic resources are limited, and a large outflow of domestic resources will inevitably lead to sluggish economic growth.

The balance of payments surplus caused by the capital account means that the country has introduced a large amount of foreign capital in the current period, which, if not properly utilized and managed, may lead to an external debt repayment crisis in the future. In contrast, the consequences of the balance of payments deficit are more sinister and urgent, and it is more difficult to adjust.

1) forcing the country to compress imports, affecting economic development (2) The withdrawal of the local currency will tighten the domestic currency, prompting the level of interest rates to rise, which will lead to a decline in industrial investment and affect economic growth. A slowdown in economic growth will in turn lead to an increase in unemployment and a decline in national income. (3) The intervention of the monetary authorities in the foreign exchange market will reduce the country's foreign exchange reserves, and if the country relies on borrowing to make up for the deficit, it is easy to plunge the country into a debt crisis.

Measures: foreign exchange buffer policy, fiscal and monetary policy, exchange rate policy, direct control policy and international coordination, etc. Article 101 of the Civil Procedure Law of the People's Republic of China stipulates that if an interested party fails to immediately apply for preservation due to the urgency of the situation, its legitimate rights and interests will be irreparably harmed, it may apply to the people's court at the place where the property to be preserved, the domicile of the respondent, or the people's court with jurisdiction over the case is to take preservation measures before initiating a lawsuit or applying for arbitration.

The applicant shall provide a guarantee, and if the applicant does not provide a guarantee, a ruling shall be made to reject the application. After the people's court accepts the application, it must make a ruling within 48 hours; Where a ruling is made to employ preservation measures, enforcement shall begin immediately. Where the applicant does not initiate litigation or apply for arbitration in accordance with law within 30 days after the people's court adopts the preservation measures, the people's court shall lift the preservation.

The balance of payments deficit refers to the situation in which a country exports less goods and services in the international market and imports more, resulting in a deficit in the balance of payments. The impact of the balance of payments deficit is very large, and it will not only have a negative impact on the economic development of a country, but also affect the development of the world economy.

First, a deficit in the balance of payments can adversely affect a country's economic development. The larger a country's balance of payments deficit, the easier it is to depreciate its currency, thereby reducing the value of imported goods and greatly reducing the competitiveness of a country's export products in the international market. At the same time, the balance of payments deficit can also put pressure on a country's foreign exchange reserves, thus limiting the development of a country's economy.

Second, the balance of payments deficit will also affect the development of the world economy. The larger a country's balance of payments deficit, the more it will finance others, resulting in an imbalance in global capital flows, which in turn affects the development of the global economy. In addition, a deficit in the balance of payments will lead to the depreciation of one country's currency, and other currencies may also be affected, which in turn will lead to fluctuations in the global currency market.

Therefore, reducing the balance of payments deficit is of great significance to the economic development of a country and the development of the world economy. A country should strengthen the management of the best policy and improve the quality and competitiveness of export products to promote the balance of payments; At the same time, a country should also strengthen economic cooperation with other countries to promote the development of the world's economy.