Glossary
Macroeconomics
Balance of trade
The balance of trade, also known as the trade balance, measures the difference between the value of a country's exports and imports over a particular period. If exports exceed imports, the country records a trade surplus. If imports exceed exports, it records a trade deficit. The trade balance may cover goods alone or goods and services, depending on how the data is presented.
What influences the trade balance?
A country's trade position can be affected by several factors, including:
- domestic and overseas economic growth;
- exchange rates;
- commodity and energy prices;
- consumer and business demand;
- the competitiveness of domestic producers.
For example, stronger domestic demand can increase imports, while stronger demand from overseas may increase exports.
The balance of trade is different from the current account. The current account is a broader measure that includes trade in goods and services as well as certain income flows and transfers between residents of a country and the rest of the world.