a.) Fall of volume of export
A decline in the volume of exports may reduce export earnings causing a deficit.
b.) Deterioration in the countries terms of trade
If the values of countries exports reduce relative to that of imports, the country may experience disequilibrium in the balance of payments as the exports would be earning less compared to what’s being paid for the imports
c.) Increase in the volume of imports
When a country’s exports remain constant but the volume of imports increases disequilibrium is likely to occur.
d.) Restriction by trading partners
If a trading partner decides to reduce importation, the other country may be importing more from such partner country compared to what it is exporting to the partner.
e.) Less capital inflow compared to outflow
Where capital inflow is less than capital outflow a country may experience a deficit in capital account and this may be reflected in the balance of payment.
f.) Over valuation of a domestic currency
An overvalued domestic currency makes the country’s exports becomes more expensive compared to imports and this may discourage exportation leading to disequilibrium in the balance of payment.
g.) Devaluation by a trading partner
Devaluation encourages exports while discouraging imports. A country trading with a country that has devalued her currency may end up importing more from and exporting less to such a country
sharon kalunda answered the question on February 19, 2019 at 10:11
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