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The difference between exports and imports within a specified goods or services account.
Save conceptThe trade balance compares what an economy sells to other economies with what it buys from them over a stated period. Exports minus imports gives the balance: a positive result is a surplus, and a negative result is a deficit. Reports may cover goods alone or goods and services together, so the coverage matters as much as the headline number.
Exports bring receipts from foreign buyers; imports represent purchases from foreign suppliers. A change in the balance can come from either side. Stronger domestic spending may raise imports, while weak foreign demand may reduce exports. Prices, and shipping disruptions can also change the measured values without an equivalent change in the quantity traded.
Suppose an economy exports US$80 billion in goods and imports US$110 billion in a month. Its goods balance is US$80 billion minus US$110 billion, or a US$30 billion deficit. If service exports exceed service imports by US$12 billion, the combined goods-and-services deficit is US$18 billion. Neither calculation says which individual businesses made a profit.
A deficit is not a government and does not, by itself, establish that an economy is failing. Imports may include equipment that expands production. The trade balance is also narrower than the current account, which includes income and transfers. Compare the same coverage, accounting basis and time period before interpreting a change.