What Is Balance of Trade?
July 21, 2017 § Leave a comment
A graduate of the MBA program at the University of Pittsburgh, Diane Kaern is a skilled business leader with expertise in operations, sales analytics, and finance. Diane Kaern previously served in a management role at Hewlett-Packard, where she managed balance-of-trade reporting processes, in addition to other duties.
Balance of trade refers to the difference in imports and exports a country produces over a set time period. The measure is often used as a means to assess economic health, and is a primary component of the balance of payments. The balance of payments is a statistical measurement of all transactions that are executed between a specific country’s residents and the rest of the world.
Sometimes referred to as net exports or commercial balance, the balance of trade can indicate a healthy or a lagging economy. A trade surplus, or positive balance, is found when the balance of trade measure shows that exports exceed imports. A trade deficit, or negative balance, occurs when imports exceed exports and is generally seen as a negative economic indicator.