Trade Balance
The trade balance equals the value of exports minus imports. A trade surplus (exports exceed imports) creates a positive balance; a trade deficit (imports exceed exports) creates a negative balance.
Real World
The UK has run a persistent current account deficit for decades — in 2022 it reached around 5% of GDP — partly because the UK imports more goods than it exports, financed by inflows of foreign investment into London's financial sector.
Exam Focus
Avoid saying trade deficits are automatically 'bad' — always consider what is financing the deficit before making a judgement.
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