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Balance of Trade

The balance of trade is a macroeconomic indicator, which is calculated as the difference between the value of all exported and imported goods and services of the country for a certain period of time. The balance of trade is reflected in the balance of payments and is part of the country’s current account.

In most countries, the balance of trade is calculated on a monthly basis (for example, in Mexico, the Netherlands, the USA, Germany, Serbia, United Kingdom, and Switzerland). In a number of countries, trading data is published quarterly (for example, in Saudi Arabia, Angola, Laos, Mozambique, and Namibia) and with annual frequency (in the UAE, Iraq, Afghanistan, Bahrain, and Chad).

The data on the balance of trade is mainly published by the state central banks (for example, in Kenya, Poland, Azerbaijan, Paraguay, and Russia) and national statistical authorities (as examples, Ireland, Denmark, Eurozone, Sweden, and the USA can be brought).

If the export of goods and services in the country exceeds imports, we are talking about an active or positive balance of trade. For example, as of the end of June 2021, the active balance of trade was observed in Norway, Brazil, Taiwan, the Republic of Korea, and Chile. The graph below shows the value dynamics of the balance of trade of these countries, starting from 2016.

If imports exceed exports, this indicates a passive balance of trade or balance of trade with a negative balance. As examples of countries with a negative balance of trade (according to the data at the end of May 2021), you can bring the United States, Serbia, Turkey, and Canada. Retrospective values of these countries’ balance of trade can be found in the following graph.

In addition, the existence of a so-called net balance of trade or balance of trade with zero balance is possible when the cost of exported products is equal to the value of imported goods. For example, in Vietnam, as of the end of December 2020 and February 2021, the balance of trade was equal to zero.

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