What is Balance of Trade?

Definition of Balance of Trade: It can be explained as the dissimilarity between the price of imports and exports of a particular company’s economic condition over a specific time period. It can also be described as one of the several economic basics affecting the cost of the currency of the country. A positive trade balance is called as a surplus trade when the number of exports crosses the imports. On the other hand, a negative balance is regarded as a trade gap or trade deficit. The trade balance is regarded as an important part of current account of nation, including money from the investment market, international aid and several other overseas transactions. The several factors affecting the trade balance include several movements of exchange rate, costs of relative production between the trading patterns, availability of materials, different types of restrictions or taxes on the trade and domestic costs of exported products. The small deficits are not considered as harmful but the large deficits are considered as a great problem for the domestic economy of a country.