Balance of Trade

Balance of Trade
Definition: Balance of trade figures are the sum of money received from a given economy by selling exports, minus the cost of buying imports. They form part of the balance of payments, which also includes other transactions such as foreign investment. These figures are usually split into visible and invisible balance figures. The visible balance represents the physical goods, and invisible represents other forms of trafficking, for example, the service economy. A positive balance of trade is known as the trade surplus and consists of exporting more (in financial capital terms) than one imports. A negative balance of trade is known as the trade deficit and consists of importing more than one exports. Neither is necessarily dangerous in modern economies, although large trade surpluses or trade deficits may sometimes be a sign of other economic problems. If the balance of trade is positive, then the economy got more money than you spend. This may seem to be a good thing, but may not always be so.