Forex glossary
Trade Balance
Exports minus imports over a specified period and coverage, such as goods and services. Positive means surplus and negative means deficit; this is a flow, not a debt stock, and its change alone does not determine currency direction.
Illustrative example
How does it work in practice?
In a hypothetical monthly goods-and-services report, exports are 120 million USD and imports are 150 million USD. The trade balance is −30 million USD, a deficit for that month rather than the country's outstanding debt.
A case to work through
Two balance scopes
In a fictional month, goods balance is −20 million and services +8 million in the same currency.
- Combined goods-and-services balance is −12 million.
- Do not substitute it for the goods-only −20 million.
What follows? Specify both coverage and period.
Example boundary: A flow balance is neither outstanding debt nor a currency forecast.
A useful distinction
Trade Balance / Gross Domestic Product (GDP)
GDP measures production; trade balance subtracts imports from exports.
Check your understanding
Combine matching goods and services balances.
Show the answer and explanation
−10 million
Add the matching balances.
Publication, units and interpretation
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Read the fuller explanation
Sources and documentation
- International Trade in Goods and Services – BEA
Defines trade balance as exports minus imports of goods and services over a period.
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The example illustrates the mechanism. Check current account conditions and instrument specifications with the provider.