Trade balance

The economic activity of each state in the international arena must be measured in some way so that it is possible to make a certain rating or list of the effectiveness of a particular system in the countries. One of the indicators that allows this to be done is the trade balance. It makes it possible to compare the trade indicators of different countries, namely, exports and imports. If the balance is positive, it means that exports exceed imports, negative - on the contrary.

The balance of the trade balance is a clear correlation of imports and exports, purchased and sold services and goods for a certain period of time. This indicator is also called the external trade balance of the country. It consists of actually paid transactions, and also includes goods and services purchased on credit. Based on this, groups have been compiled into which the countries are divided according to the final balance value. The negative balance of the trade balance is characterized by the prevalence of the import of goods into the territory of the state over their export and shows that the country consumes more foreign goods. But this phenomenon has a positive side, namely, the ability to curb inflation and support a high standard of living. This example can serve as the United States of America and the United Kingdom.

The trade balance can also be positive, which indicates an increased demand for domestic goods on the territory of the state, as well as in the international market. The positive balance of the trade balance is characterized by the prevalence of exports of goods and services over imports. A negative balance of foreign trade operations can speak of an underdeveloped and uncompetitive economy. Most often, this situation leads to devaluation of the national currency (devaluation), which happens as a result of the lack of ability to pay off on import transactions.

Export industries can be characterized as high-tech and capital-intensive, which in turn will attract rather high volumes of capital investments and resources, which are most often expressed as direct, as well as portfolio investments. But, despite this fact, the lack of a competitive and efficient economic system of the country is trying to cover additional issue (issue) of securities, debt obligations, government bonds. The indicator of the trade balance is one of the few indicators that is able to have an indirect, but direct, direct impact on fluctuations in the exchange rate of the national currency. This is explained as follows: the trade balance reflects the constant movement of financial resources between partner countries associated with the provision of certain goods and services under the treaty.

It is worth noting the existence of one paradox, which is that the reaction of the national currency to the trade balance report is minimal, and all because of the structural and technical reasons. That is, the report is characterized by a certain delay. The reason for this is the time it takes to prepare and design it. Therefore, the course dynamics very rarely reflect the true flow of values and material resources between trading partners.

At the beginning of the analysis, it is worth paying attention to exports, because it plays a decisive role in shaping the value of growth in the economy. Then experts analyze the import, because it reflects, first of all, the demand for foreign products: goods and services.

The trade balance is an indicator by means of which it is possible to compare the external economic activities of countries, as well as their internal structure.