What is Capital Account?

Capital Account states the roundup of capital expenditure and income of a nation and is a vital part of the balance of payments of a nation. It is usually tracked by various investments and loans coming and going out of the economy. It is made up of foreign direct investments, portfolio investments etc.

It summarises net flow of private and public investments in the country. Thus, a Capital Account Deficit means an outflow of money from the economy in addition to rising in ownership of foreign assets. The balance of Payments is recorded in Current Account while Capital Account only records the capital transactions.