The economic activity of each state in the international arena must be measured in some way in order to be able to draw up a certain rating or list of the effectiveness of a particular system in countries. One such indicator that allows this to be done is the trade balance. It makes it possible to compare the trade performance of different countries, namely, export and import. If the balance is positive, then this means that exports exceed imports, negative - vice versa.
The trade balance is a clear ratio of imports and exports of purchased and sold services and goods for a certain period of time. This indicator is also called the country's foreign trade balance. It consists of actually paid transactions, and also includes goods and services purchased on credit. Based on this, groups were compiled into which countries are divided depending on the final balance value. The negative trade balance is characterized by the predominance of the import of goods into the state over their export and indicates that the country consumes more foreign goods. But this phenomenon has a positive side, namely the possibility of containing inflation and supporting a high standard of living. Such an example is the United States of America and Great Britain.
The trade balance may also be positive, which indicates an increased demand for domestic goods in the state, as well as in the international market. The trade surplus is characterized by the predominance of exports of goods and services over imports. It is the negative balance of foreign trade operations that speaks of the underdeveloped and uncompetitive economy. Most often, this situation leads to the depreciation of the national currency (devaluation), which occurs as a result of the lack of the ability to pay on import transactions.
Export industries can be characterized as high-tech and capital-intensive, which in turn will attract quite high volumes of capital investments and resources, which are most often expressed in the form of direct as well as portfolio investments. But, despite this fact, they try to cover the lack of a competitive and efficient economic system by additional issue (issue) of securities, debt obligations, and government bonds. The trade balance indicator is one of the few indicators that is capable of exerting not an indirect, but a direct, direct influence on the fluctuations 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 contract.
It is worth noting the existence of one paradox, which consists in the fact that the reaction of the national currency exchange rate to the report on the trade balance is minimal, and all because of structural and technical reasons. That is, the report is characterized by a certain delay. The reason for this is the time required for its preparation and execution. Therefore, the dynamics of the course very rarely reflects the true flow of values and material resources between trading partners.
At the beginning of the analysis, it is worth paying attention to export, because it is it that plays a decisive role in shaping the value of growth in the economy. Then the experts analyze the import, because it primarily reflects the demand for foreign products: goods and services.
Trade balance - an indicator with which you can compare the external economic activity of countries, as well as their internal structure.