Trade Balance

The trade balance is a number that compares the monetary value of a country's flow of exports with its flow of imports over a specific period of time. The number is calculated exclusively from the current account of the country's balance of payments. If the number is positive, it indicates a trade surplus in that the monetary value of the exports sold exceeds the monetary value of the imports purchased; in other words, the country's international trade activity has generated a net inflow of monetary value. If, on the other hand, the number is negative, a trade deficit exists because the value of exports sold is not enough, by itself, to generate the funds necessary to finance the value of the imports purchased. In this ...