home » Calculations » Trade balance and its characteristics. Foreign trade balance (trade balance) How does the country's foreign trade balance change

Trade balance and its characteristics. Foreign trade balance (trade balance) How does the country's foreign trade balance change

Answers:

The foreign trade balance of a country is the ratio between the sum of the prices of goods exported by any country, or a group of countries, and the sum of the prices of goods imported by them for a certain period of time, for example, for a year, quarter, month. The foreign trade balance includes goods transactions actually paid for and carried out on credit. The foreign trade balance is compiled for individual countries and for groups of states. The trade balance has its balance. The trade balance is an annual (quarterly or monthly) indicator of the country's foreign trade transactions. If the trade balance has a positive balance, this means that in monetary terms (the volume of goods is converted into money), more goods were sent abroad (exports) than received from other countries (imports). If the balance is negative, then the import of goods prevails over the export. A positive trade balance indicates the demand for the goods of a given country in the international market, as well as the fact that the country does not consume everything that it produces. A negative trade balance indicates that a country, in addition to its own goods, also consumes foreign goods.

Foreign trade balance of the country- the ratio of the value of exports and imports of goods for a certain period of time. Foreign trade balance includes goods transactions actually paid for and carried out on credit. The foreign trade balance is compiled for individual countries and for groups of states.

The trade balance has a balance. trade balance- this is an annual indicator (quarterly and monthly is possible) of information on the country's foreign trade transactions. If the trade balance has a positive balance, this means that in monetary terms (the volume of goods is converted into money), more goods were sent abroad (exports) than received from other countries (imports). If the balance is negative, then the import of goods prevails over the export. A positive trade balance indicates the demand for the goods of a given country in the international market, as well as the fact that the country does not consume everything that it produces. A negative trade balance indicates that a country, in addition to its own goods, also consumes foreign goods. A negative trade balance in countries such as the US and the UK makes it possible to contain inflation and maintain a high standard of living by moving labor-intensive industries outside the state.

In underdeveloped countries, a negative trade balance indicates the non-competitiveness of the export sectors of the economy, which often leads to devaluation (depreciation) of the money of such countries due to the fact that they cannot pay for import purchases. Countries such as the US and the UK have capital-intensive and high-tech industries that attract significant amounts of capital from around the world in the form of portfolio or direct investment. However, due to the lack of competitiveness of export industries, these countries are forced to cover the bulk of the trade deficit by issuing private and government debt instruments.

Merchandise Trade Deficit (Balance) - the balance of trade or, otherwise, the balance of trade in goods, for the United States over the past many years it has been a deficit, therefore, the reduction of Trade Deficit is often stipulated immediately. The Commodity Trade Report details monthly exports and imports of goods to the US. This is a very important indicator that characterizes both the net movement of goods and the monetary and foreign trade policy of the state. The indicator is measured as the difference between exports and imports in absolute terms in billion dollars: Merchandise Trade Deficit (USD bln.) = Export - Import.

Food (Food)

Raw materials & industrial supplies (Raw materials and industrial supplies) +

Consumer goods (Consumer goods) +

Autos (cars) +

Capital goods (Means of production) +

Other merchandise (Other products).

Foods and Feeds+

Industrial Supplies+

Capital Goods (Means of Production)+

Ex Autos (Car export)+

Autos and Parts+

Consumer Goods+

Other Merchandise (Other Goods).

However, official reports and subsequent analysis may highlight particularly important components, for example:

Total Deficit (general deficit)

Ex Petroleum (gasoline export)

Ex Autos (car export)

2) By country.

Relationship with other indicators. One of the few indicators that has not an indirect, but a direct impact on the exchange rate, since it reflects the movement of funds between countries for the goods and services provided. However, the paradox is that the reaction of the exchange rate to this report is minimal due to technical and structural reasons, namely: the report is too late from the time when the real movement of values took place, in addition, the movement of capital, due to trade relations, is somewhat times less than the movement of capital associated with the work of credit and stock markets, and the cycles of these two flows, as a rule, do not coincide. With an increase in the trade deficit, the demand for foreign currency increases and the local currency exchange rate falls. The balance of trade is influenced by domestic demand indicators, as they determine the dynamics of imports, as well as the exchange rate itself, which adjusts the nominal value of import receipts in local currency.

Features of the indicator behavior. For foreign exchange markets, the overall balance is a key indicator. At the beginning, exports are analyzed, because. it has a direct impact on the value of growth in the economy. Imports reflect the demand for goods in the US. The increase in imports reflects the formation of stocks, which may indicate a possible subsequent slow increase in sales. In the future, specific product groups are analyzed. There are several special exports and imports that can significantly affect the trade balance. For example, oil in terms of imports (especially the increase in its price) and aviation in terms of exports. Depending on product categories, the growing deficit created by a small drop in exports could push fixed income markets in either direction. Unlike other sectors of the economy, there is no consistent relationship between the trade balance and the phases of the business cycle.

The balance of trade, or net exports, is compiled on the basis of customs statistics on the sale and purchase of assets in the world market.

The trade balance is included in the country's balance of payments, which reflects the amount of financial transactions between the state and international partners.

Foreign trade balance

The trade balance determines the country's competitiveness in the international market and its economic condition. This indicator is measured by subtracting the value of goods and services entering the country from the value of those exported.

Foreign Trade Balance = Export Value - Import Value

The algorithm can be used for tangible assets and separately for services. The calculation results can be as follows:

A trade surplus (surplus) that occurs when exports outnumber imports. It indicates a great demand for local products, which increases its price and strengthens the national currency. Exports are increasing due to the creation of jobs, the development of high-tech production, and the extraction of natural resources (oil, gas, etc.). A surplus increases a country's gross domestic product (GDP).
A negative trade balance (deficit) that occurs when imports outnumber exports. A trade deficit appears when domestically produced products do not meet the needs of the population or have low competitiveness in the international market. The growth of imports promotes price competition in the domestic market, which prevents inflation. The deficit leads to a decrease in the value (devaluation) of the national currency, a reduction in employment and a decline in production. To eliminate the negative consequences of the state apply the policy of protectionism. They set customs tariffs, import quotas, to protect the national industry from foreign competition.
Net balance (net balance) that occurs when the volume of exports is equal to the volume of imports. Cash receipts from the sale of goods in the foreign market cover the costs incurred for the purchase of foreign products.

Trade balance and economic policy

The foreign trade balance depends on the country's economic policy. The states that are in the free trade zone exchange goods without restrictions on import and export and focus on imports to attract foreign investment. The formation of the trade balance is affected by:

difference in production costs (land, labor, capital) between trading partners;
availability of raw materials, materials, natural resources;
change in exchange rates;
taxes and restrictions on international trade;
availability of currency, reserves to pay for imports;
domestic prices for exported goods.

Economically developed countries import a large amount of raw materials from developing countries. Value-added products (consumer goods) made from these materials can be shipped to other states. Developed countries are characterized by a trade deficit because they consume more raw materials than they export.

Foreign trade is evaluated using the basic concepts of exports, imports and foreign trade turnover.

— this is the amount of goods (in natural or value terms) exported from the country.

- this is the amount of goods (in physical or value terms) imported into the country from abroad.

Foreign trade turnover is the sum of a country's exports and imports.

Foreign Trade Turnover Formula

Foreign trade turnover = Export + Import.

At the same time, it should be remembered that the country's foreign trade turnover is calculated in value units, since it includes heterogeneous goods that are not comparable in physical terms. For individual goods, it is possible to measure exports and imports in natural units (pieces, tons, meters).

Foreign trade balance formula

A very important concept is the balance of foreign trade.

Balance of foreign trade = Export - Import.

The balance of foreign trade can be positive or negative and rarely goes to zero. Accordingly, we can talk about positive or negative country's trade balance. A negative trade balance means the emergence of a passive trade balance. Conversely, a positive balance characterizes the active trade balance of the country.

World export growth rate

To analyze the development of such a multifaceted phenomenon as foreign trade, a system of indicators is used. Some indicators reflect the growth rate of world trade. These, for example, include the indicator of the growth rate of world exports (Te):

Te \u003d (Ea: Eo) x 100%,

E1 - export of the current period,
E0 - base period export.
In addition, a number of indicators are used to characterize the dependence of the country's economy on foreign trade:

Export quota (Ke):

Ke \u003d (E / GDP) x 100%,

E is the value of exports;
GDP is the country's gross domestic product for a year.

Import quota (Ki):

Ki \u003d (I / GDP) x 100%,

where I is the cost of imports.

What's happened foreign trade balance (trade balance)What is foreign trade balance... More?

Trade balance country is the difference between the value of exports and the value of imports over a given period of time.

If the value of goods imported into a country exceeds the value of goods exported (negative balance), the country is said to have a “trade deficit”. In the opposite situation (the balance is positive), there is a surplus.

The balance of trade is part of a country's overall balance of payments, which is the difference between all of a country's savings and its investment.

It is also called "foreign trade balance", "commercial balance" and "net exports".

How do trade deficits and surpluses affect the economy?

A trade deficit is not always a negative factor. For example, with the development of the country's economy, an increase in imports can provide demand for goods and services or cause increased price competition.

However, during a recession, countries tend to increase their exports in order to create domestic jobs and stimulate demand for their own goods and services. In such a situation, the trade deficit will adversely affect the economy as a whole.

Similarly, trade surpluses are not always good for the economy. A surplus may mean that a country is not using its resources efficiently enough; free funds that she could direct to improve her well-being.

In times of economic downturn, developing countries especially need to create a positive balance (surplus). This is usually because they have to pay higher import prices for finished goods and export raw materials at low prices.