What is meant by balance of trade?

Updated: 12/9/2022
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  • The term Balance of Trade (or BOT) is the largest component of a country's current account in its balance of payments (BOP) accounts.
  • It shows the difference between export earnings and import expenditure.
  • It is called 'favorable' when the amount realized from physical (or tangible or visible) exports is more than the amount spent on physical imports, otherwise called 'unfavorable.'
  • It is called also trade balance.
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Q: What is meant by balance of trade?
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What is meant by the balance of trade?

The one says the balance of trade, what is meant by that is the outgoing product compared to your incoming product, to be evenly balanced would mean no profit. You want your balance of trade to be more incoming money than outgoing product.

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A positive balance is known as a trade surplus if it consists of exporting more than is imported; a negative balance is referred to as a trade deficit.

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