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Trade Balance

Also referred to as balance of trade, the trade balance is the net difference over a period of time between the value of a country’s imports and exports of merchandise. Movable goods such as automobiles, foodstuffs, and apparel are included in the trade balance; payments abroad for services and tourism are not. When exports exceed imports, a favorable trade balance results; when imports are greater, the balance is said to be unfavorable. The trade balance is represented in the context of the country’s entire international economic position and can be offset by other influences. For example, a country that has a consistently favorable trade balance could import considerable services, which may effect a mediocre or poor international economic position.