What is meant by Balance of Trade?

  • October 27, 2020 05:22 PM AEDT
  • Team Kalkine

Balance of Trade (BOT) refers to the difference between the value of exports and imports of a country for a given period. Balance of Trade is a component under the Balance of Payments, which is a balance sheet maintained by a country for all types of international transactions related to assets, goods, loans, and others. Balance of Trade is added to Factor Income and Unilateral Income under the current account in a BOP.

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Are Balance of Trade and Balance of Payments same?

Balance of Trade hugely impacts the Balance of Payments. However, a deficit or surplus in one does not always mean the same for the other. For instance, countries having a BOP surplus might also be observing a BOT deficit at the same time.

 


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