What is a Trade Balance?
Trade balances are evaluations of the relationship between the imports and exports of a given country. Specifically, the purpose of the trade balance is to determine if the amount of goods and services leaving the country is balancing at a reasonable level with goods and services entering the country. Properly assessing the current balance of trade for a given country provides key information about the overall economic health of that nation. The most common method of determining the current trade balance is to determine a specific period to consider. Often, the period will be a three to six months, although it is not unusual for a full calendar year to be considered. Once the time frame is established, attention can turn to compiling figures that relate to the total amount of imported goods and services for the period cited. After determining the cost of goods and services that entered the country during the period, the next step is to identify the cost of goods and services that were
