Trade balance is the difference between the values of the products that a country sells to other countries (exports), and the cost of the goods that the country buys from abroad (imports) during a particular period (commonly a year).
A trade surplus means that the value of exports is greater than imports. A trade deficit is when there are more imports than exports.
|Positive trade = Trade surplus|
|Negative balance = Trade deficit|
Another useful data is the balance of payments of a country that consists of the record of all economic transactions between the residents of a country and the rest of the world. To calculate it we add to the trade balance, the services, the capital movements (money spend by tourists, sent home by emigrant workers.. and the financial transactions (investments, buys of foreign companies…).
If a country has higher incomes than payments, the balance of payments will be positive and if a country has higher payments, the balance of payments will be negative.
If a country has a negative balance trade, it owes money to other countries, because that means that needs to pay more than it collects and it’s say that country has an external debt.
SPAIN´S TRADE BALANCE (€M)