What is the balance of trade?

The balance of trade is a critical concept in international economics, representing the difference between a country's exports and its imports over a specific period. When a country exports more goods and services than it imports, it has a trade surplus. Conversely, if imports exceed exports, the country experiences a trade deficit. This metric provides insight into a nation's economic health, trade relationships, and overall competitiveness in the global market. Understanding the balance of trade helps economists and policymakers evaluate economic strategies and the impact of trade on the national economy.