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Balance of payments disequilibrium refers to a situation where a country’s total payments to other nations exceed its total receipts from them, or vice versa, over a given period. In other words, it is an imbalance between the inflows and outflows of foreign exchange, indicating that the demand for a country’s currency does not equal its supply in the international market. A persistent deficit reflects that a nation is spending more on imports and foreign obligations than it earns from exports and other inflows, whereas a surplus indicates the opposite. Both types of disequilibrium are undesirable as they can disrupt economic stability, influence exchange rates, and affect international confidence in the country’s economy. Several factors contribute to balance of payments disequilibrium. One major factor is structural changes ___ ______ ______ _______ ________.
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