Trade Deficit & Trade Surplus

Trade deficit and trade surplus refers to the balance of trade. A trade surplus represents a positive balance of trade, creating employment and economic growth. It refers to a positive balance of trade, where a country’s exports exceed its imports, and a net inflow of domestic currency from foreign markets. It helps strengthen a country’s currency relative to other currencies, greatly affecting currency exchange rates. A trade deficit represents a net outflow, occurring when a country’s imports are greater than its exports. It refers to lower demand for currency that makes it less valuable in the international markets and international trade, resulting in impacts on production, jobs, and national security. Both trade deficits and surpluses have immediate impact on several economic indicators, including GDP, as they play a key role in global markets - particularly in export-driven economies and emerging markets.