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The "basic balance", an interesting concept that is no longer widely used
The basic balance is the sum of the current account balance and the balance between long-term capital inflows and outflows. It is therefore equal to net short-term capital outflows. The basic balance is an interesting concept ; a country with a basic balance surplus : Is not normally threatened by a financial crisis or a balance of payments crisis; Has resources that it could use to invest more and increase useful public spending - obviously if the economic policy pursued allows it to do so. Among the major OECD countries, Germany and Australia have a basic balance surplus; the United States, Canada and Italy have a basic balance deficit.
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Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
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