Balance of trade refers to the difference between the value of a country’s imports and the value of its exports over a certain period of time. It is also referred to as the trade balance.
If a country’s exports exceed its imports, then it has a trade surplus, which means it is earning more foreign currency than it is spending. On the other hand, if a country’s imports exceed its exports, then it has a trade deficit, which means it is spending more foreign currency than it is earning.
The balance of trade is an important economic indicator, as it reflects the competitiveness of a country’s economy and its ability to produce goods and services that are in demand in the global marketplace. It also affects the value of a country’s currency, as a trade surplus can lead to a strengthening of the currency, while a trade deficit can lead to a weakening of the currency.
