Terms	Definition
BoP account	A BoP account is a statistical statement that systematically summarises, for a specific time period, the economic transactions of an economy with the rest of the world.
BoP surplus/deficit	For a reference period, if an economy receives more foreign currencies than it pays in external transactions in goods, services, income and investment, as well as in external transfers and remittances, then it is said to have a BoP surplus, which is equal to its overall net inflow of funds from the rest of the world. Conversely, there will be a BoP deficit which is equal to its net outflow of funds.
Capital account	The capital account measures external transactions in capital transfers, and in the acquisition or disposal of non-produced, non-financial assets.
Capital and financial account	The capital account measures external transactions in capital transfers, and in the acquisition or disposal of non-produced, non-financial assets. The financial account records transactions in financial assets and liabilities between residents and non-residents. It shows how an economy's external transactions are financed. Transactions in the financial account are classified into direct investment, portfolio investment, financial derivatives, other investment and reserve assets.
Capital transfers	Capital transfers are the transfers of ownership of a fixed asset or the forgiveness of a liability without receiving any economic value in return. Cash transfers that are linked to, or conditional on, the acquisition or disposal of a fixed asset are also capital transfers. Capital transfers consist mainly of debt forgiveness and migrants' transfers. Migrants' transfers are contra-entries to the flows of goods or changes in financial items that arise from the migration of individuals between two economies.
Changes in inventories	Changes in inventories refer to the value of physical change in the inventories of work-in-progress, raw materials and finished goods held by business enterprises, mainly manufacturers and distributors.
Compensation of employees (CE)	Compensation of employees (CE) refers to labour income earned by non-residents from their employment within the economic territory of Hong Kong and labour income earned by residents from their employment outside the economic territory. It comprises wages, salaries and other remuneration whether paid in cash or in kind.
Current account	The current account largely measures the flows of real resources including exports and imports of goods and services, income receivable and payable abroad, and current transfers from and to abroad. Current account transactions reflect the provision and acquisition of real resources by an economy to and from other economies. Goods comprise all movable goods that change ownership from residents to non-residents (exports) or from non-residents to residents (imports). Goods cover general merchandise, goods for processing, goods procured in ports by carriers, repairs on goods, and non-monetary gold. Services include services rendered by residents to non-residents (exports) or by non-residents to residents (imports). Service transactions are classified by type of services, namely transportation, travel, insurance services, financial services and other services. The value of financial intermediation services is indirectly measured using the "reference rate" method. Income consists of earnings by residents from non-residents (income receivable) or by non-residents from residents (income payable) for the provision of factors of production. The concepts and methods of income under the current account of the BoP account are the same as those of the external factor income flow under GNP. Current transfers are transactions in which residents of an economy provide/receive real or financial resources that are likely to be consumed immediately or shortly, to/from non-residents without the receipt/provision of equivalent economic values in return. Current transfers are unilateral in nature and are offsetting entries in the BoP account for one-sided transactions. They include workers' remittances, donations, official assistance, pensions and so on.
Current transfers	Current transfers are transactions in which residents of an economy provide/receive real or financial resources that are likely to be consumed immediately or shortly, to/from non-residents without the receipt/provision of equivalent economic values in return. Current transfers are unilateral in nature and are offsetting entries in the BoP account for one-sided transactions. They include workers' remittances, donations, official assistance, pensions and so on.
DI inflow	DI inflow refers to the additions/withdrawals of investment received from abroad of Hong Kong residents during a period.
DI outflow	DI outflow refers to the additions/withdrawals of investment abroad of Hong Kong residents during a period.
Direct investment (DI)	Direct investment refers to external investment which allows an investor of an economy to have a lasting interest and a significant degree of influence or an effective voice in the management of an enterprise located in another economy. For statistical purpose, an effective voice is taken as equivalent to a holding of 10% or more of the voting power in an enterprise. DI comprises equity capital, reinvested earnings and other capital. Equity capital means equity in branches and shares in subsidiaries and associates. Reinvested earnings consist of the investors' share of earnings not distributed by subsidiaries or associates. Other capital mainly involves inter-company debt transactions. These include short-term and long-term borrowing and lending of funds between parent companies and their branches, subsidiaries and associates.
Direct investment income (DII)	Direct investment income (DII) refers to earnings of residents from their direct investment outside the economic territory and earnings of non-residents from their direct investment within the economic territory, in which direct investors have a lasting interest and a significant degree of influence or an effective voice in the management. These earnings are in the form of receipts of distributed dividends, share of undistributed profits, net interest receipts from inter-company debts and gross rentals.
Exports and imports of goods	Exports of goods include domestic exports and re-exports of goods recorded on a f.o.b. basis. Imports of goods are valued on a f.o.b. basis. External trade of non-monetary gold is also included.
Exports and imports of services	Exports and imports of services cover transactions in services between Hong Kong residents and the rest of the world. The major service groups include transportation services, travel services, merchanting and other trade-related services, and other services. Other services cover a wide variety of services including financial services; insurance services; business and professional services.
Factor income	Factor income is mainly classified into investment income and compensation of employees (CE). Investment income includes direct investment income (DII), portfolio investment income (PII) and other investment income (OII).
Financial account	The financial account records transactions in financial assets and liabilities between residents and non-residents. It shows how an economy's external transactions are financed. Transactions in the financial account are classified into direct investment, portfolio investment, financial derivatives, other investment and reserve assets.
Financial derivatives	Financial derivatives are financial instruments that are linked to a specific financial instrument or indicator or commodity, and through which specific financial risks can be traded in financial markets (including on exchanges and over-the-counter) in their own right. Financial derivatives include option-type contracts (e.g. warrant and option) and forward-type contracts (e.g. future, interest rate swap, currency swap, forward rate agreement, forward foreign exchange contract).
Flow of DI	Flow of DI refers to the additions/withdrawals of investment abroad or investment received from abroad of Hong Kong residents during a period.
GDP by Expenditure Component	Under the expenditure approach, GDP is compiled as total final expenditures on goods and services (including private consumption expenditure, government consumption expenditure, gross domestic fixed capital formation, changes in inventories and exports of goods and services), less imports of goods and services.
Government consumption expenditure	Government consumption expenditure refers to the expenditure on consumption goods and services by government departments which are not engaged in market activities and quasi-government non-profit institutions. It is calculated as the sum of compensation of employees and purchases of goods and services, less receipts from sales of goods and services. Government units engaged in market activities are not covered. They are distinguished from other government departments in that they are engaged in the production of goods and services mainly for sale to the public.
Gross domestic fixed capital formation	Gross domestic fixed capital formation covers the gross value of expenditure on machinery, equipment and computer software; expenditure on building and construction; and costs of ownership transfer.
Gross Domestic Product (GDP)	GDP is a measure of the total value of production of all resident producing units of a country or territory in a specified period, before deducting allowance for consumption of fixed capital.
Gross Domestic Product (GDP) at Basic Prices	The production measure of GDP can be valued either at market prices or at basic prices. At market prices it is valued at market or imputed prices and is thus inclusive of taxes on production and taxes on products such as customs and excise duties. At basic prices it is valued at the cost of production and thus includes taxes on production only. Hence they differ by the amount of taxes on products.
Gross Domestic Product (GDP) by Economic Activity	GDP by economic activity is the sum of the value added of resident producing units, e.g. factories, shops and service organisations. GDP by economic activity provides data to support sectoral analyses from various perspectives. Firstly, annual current price GDP by economic activity provides data for analysing the longer-term trend in the relative importance of different economic activities. This helps to depict changes in the underlying economic structure. Secondly, the year-on-year percentage change of volume measures of GDP by economic activity provides data for assessing the relative performance of different economic activities. Thirdly, volume measures of GDP by economic activity provides data for analysing the contribution of economic activities to overall economic growth. This facilitates analysis of the source of growth of an economy.
Gross External Debt	Gross External Debt (ED), at a particular time point, is the outstanding amount of those actual current, and not contingent, liabilities that are owed to non-residents by residents of an economy, and require payment(s) of principal and/or interest by the debtor at some point(s) in the future. Contingent liabilities are not included in ED. Contingent liabilities are commitments to undertake certain responsibilities in case some well defined conditions are fulfilled. For a liability to be included it must be actually existing and be outstanding. Debt includes arrears of principal and interest. Commitments to provide economic value in the future generally do not establish claims until and unless the ownership of items is changed, services are rendered, or income accrues. Gross ED refers to the sum of non-equity liability components in the IIP statement of an economy. To facilitate the assessment of external financial development and trends in the performance of an economy from different facets, the presentation of IIP and ED is different. IIP is classified in order by assets/liabilities, by investment component, by instrument, and by sector. In presenting the ED position, data are classified by four sectors (general government, the monetary authority, banks and other sectors), followed by term of original maturity (long- and short-term), and by instrument (bonds and notes, money market instruments, loans, currency and deposits, trade credits, and other debt liabilities). Inter-company lending between entities in a direct investment relationship is separately presented.
Gross National Product (GNP)	GNP is a measure of the total income earned by residents of a country or territory from engaging in various economic activities, irrespective of whether the economic activities are carried out within the economic territory or outside. In other words, in compiling GNP, earnings of residents from various economic activities within or outside the economic territory are included, whereas earnings of non-residents from economic activities within the economic territory are excluded. GNP is computed by the following formula : GNP = GDP + Factor income earned by residents from outside the economic territory - Factor income earned by non-residents from within the economic territory
Implicit price deflator (IPD) of GDP	Implicit price deflator (IPD) of GDP is generally used as a broad measure of overall inflation in the economy. It takes account of all price changes relating to consumption, investment, exports and imports. The IPD of GDP is implicitly obtained by dividing the current price GDP by the chained dollar estimates of GDP.
International Investment Position (IIP)	An economy's International Investment Position (IIP) is a balance sheet of the stock of its external financial assets and liabilities at a particular time point. In IIP, external financial assets pertain to possessions, in the form of prescribed investment instruments having commercial or exchange value, that are owned by residents with claims on non-residents, and other financial assets where no debtor is involved (e.g. monetary gold). External financial liabilities refer to financial claims which are owed by residents with obligations to non-residents. Fully consistent with the Balance of Payments financial account, IIP is categorised by type of investment. Assets and liabilities are divided into direct investment, portfolio investment, financial derivatives and other investment. The asset side of IIP also includes the reserve assets. The difference between assets and liabilities represents the net international investment position.
Inward DI	Inward DI refers to DI in a Hong Kong enterprise by a non-Hong Kong resident. Typical examples of inward DI are multinational corporations' branches and subsidiaries operating in Hong Kong.
Long-term debt	Long-term debt is defined as debt with a maturity of more than one year or with no stated maturity.
Net change in capital and financial non-reserve assets	The net change in capital and financial non-reserve assets refers to transactions in capital transfers and transactions in external investment other than reserve assets, viz. transactions in direct investment, portfolio investment, financial derivatives and other investment. The net change in financial non-reserve assets refer to transactions in external investment other than reserve assets.
Other investment	Other investment refers to other financial claims on and liabilities to non-residents that are not classified as direct investment, portfolio investment, financial derivatives or reserve assets. This includes non-marketable loans, currency and deposits, trade credits, financial leases and so on.
Other investment income (OII)	Other investment income (OII) refers to interest inflow from, and outflow to, non-residents arising from other financial claims and liabilities that are not classified as DII or PII. Examples of these claims and liabilities include non-marketable loans, currency and deposits, trade credits and financial leases. Interest income receivable and payable are net of the financial intermediation services.
Outward DI	Outward DI refers to DI by a Hong Kong resident in a non-resident enterprise.
Per capita GDP	Per capita GDP of a country or territory is obtained by dividing total GDP in a year by the population of that country or territory in the same year.
Per capita GNP	Per capita GNP of a country or territory is obtained by dividing GNP in a year by the population of that country or territory in the same year.
Portfolio investment	Portfolio investment refers to investment in non-resident equity securities and debt securities (e.g. bonds and notes, money market instruments). Compared with direct investors, portfolio investors in equity securities and debt securities of non-resident enterprises have no lasting interest or influence in the management of the companies they invest. A holding of less than 10% voting power in an enterprise is regarded as portfolio investment.
Portfolio investment income (PII)	Portfolio investment income (PII) refers to earnings of residents from investment in non-resident equity securities (e.g. stocks and shares) and debt securities (e.g. bonds and notes, money market instruments ), and earnings of non-residents from investment in resident equity securities and debt securities. Different from investors making direct investment, portfolio investors in such equity securities and debt securities have no lasting interest or influence in the management of the companies they invest.
Position of DI	Position of DI refers to the value of investment abroad or investment received from abroad of Hong Kong residents at a specified date.
Position of inward DI	Position of inward DI refers to the value of investment received from abroad of Hong Kong residents at a specified date.
Position of outward DI	Position of outward DI refers to the value of investment abroad of Hong Kong residents at a specified date.
Private consumption expenditure	Private consumption expenditure refers to the value of final consumption expenditure on goods and services by households and private non-profit institutions serving households. It is calculated as the sum of consumption expenditure on goods and services in the domestic market and the expenditure of Hong Kong residents abroad, less the expenditure of non-residents in the domestic market.
Reserve assets	Reserve assets consist of foreign currency assets that are readily available to and controlled by the monetary authority of an economy (in the case of Hong Kong, the Hong Kong Monetary Authority) for directly financing payment imbalances and for indirectly regulating the magnitude of such imbalances through intervention in foreign exchange markets to affect the currency exchange rate of that economy.
Resident producing units	A producing unit is considered as resident in a country or territory if it maintains a centre of economic interest in the economic territory of that country or territory. The economic territory of a country or territory consists of the geographic territory administered by a government of the country or territory within which persons, goods and capital circulate freely.
Short-term debt	Short-term debt is debt payable on demand or with a maturity of one year or less.
Stock of DI	Stock of DI refers to the value of investment abroad or investment received from abroad of Hong Kong residents at a specified date.
Stock of inward DI	Stock of inward DI refers to the value of investment received from abroad of Hong Kong residents at a specified date.
Stock of outward DI	Stock of outward DI refers to the value of investment abroad of Hong Kong residents at a specified date.