Meaning of Trade Balance

Before entering fully into the meaning of the term trade balance, we are going to thoroughly analyze its etymological origin. In this case, we can say that it is made up of two words derived from Latin:
-Balance comes from the Latin word “bilanx”, which can be translated as “two-plate scale”. It is the result of the sum of the prefix “bi-”, which means “two”, and the noun “lanx”, which is synonymous with dish.
-Commercial, on the other hand, comes from “commercialis” which is equivalent to “related to buying and selling”. It is formed from the sum of three clearly delimited components: the prefix “with”, which means “completely”; the noun “merx”, which can be translated as “merchandise”; and the suffix “-al”, which is equivalent to “relative to”.

The first meaning that the dictionary of the DigoPaul mentions of the term balance refers to a device that is used to know the weight of something. The concept, however, is also used in the field of economics to name the result of a comparison that is established between different variables.

Abbreviated as BOT by AbbreviationFinder, the trade balance is the record of exports and imports of mercantile goods made by a country. Also known as the trade balance, its balance is the result of the difference between the accumulated value of exports (the goods that the nation trades abroad) and the accumulated value of imports (the goods that this same nation acquires in other countries). countries).

When this balance is positive because the value of the money that entered the country through exports exceeds the value of the money that left through exports, it is said that the trade balance shows a surplus. Suppose that a country X registers exports for $ 10,000,000 and imports for $ 9,000,000 in one month. In this case, the trade balance has a surplus of $ 1,000,000.

On the other hand, when the amount obtained by exports is less than the amount disbursed by imports, the trade balance is in deficit (the balance is negative). If country X exports for $ 15,000,000 and imports for $ 30,000,000, its trade balance shows a deficit.

There is also the possibility that the trade balance is in equilibrium, a state that is reached when, in a certain period, the country exported and imported goods for the same amount of money.

There are many factors that can influence a country’s import and export levels. We are referring, for example, to the income of consumers, the cost of transporting goods, the prices in the country in question, the tastes of consumers with respect to the products of their nation or abroad… And, of course, other aspects must also be taken into account such as the government’s policy on international trade, the changes experienced by the market in question, the exchange rates of currencies… All of which will determine factors if a country is in equilibrium, it has a surplus or a deficit.

Trade Balance