Finance
What is The balance of trade?
The balance of trade is the difference between the value of a country's exports and its imports. A surplus means it sells more than it buys abroad; a deficit means the opposite. It's a key measure of a nation's economic exchange with the world.
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Watch a 2-minute lesson with voice + animation that explains the balance of trade.
Key things to understand
- 1It compares the value of exports versus imports.
- 2Exports > imports = a trade surplus.
- 3Imports > exports = a trade deficit.
- 4It's a major part of a country's overall economy.
Frequently asked questions
- What is the balance of trade?
- The difference between the value of a country's exports and imports of goods and services.
- What's the difference between a trade surplus and deficit?
- A surplus means a country exports more than it imports; a deficit means it imports more than it exports.
- Is a trade deficit bad?
- Not necessarily — it can reflect strong demand or investment, though large, persistent ones can raise concerns.