In the context of national accounts, a trade balance is understood to mean a comparison of all goods imports and exports of an economy within a certain period of time.
This means that the trade balance relates to foreign trade and thus to the cross-border movement of goods in a country. The trade balance shows whether a company has a payment claim or a payment obligation abroad.
As part of the current account and thus also as part of the balance of payments, the trade balance is at the top of the list and is the most important sub-balance of the current account. This fact results in an important basis for the economic decisions and measures in a company.
The structure and forms of the trade balance
According to Howsmb, the trade balance is mainly presented in graduated form and is divided into debit and credit. Goods exports are recorded on the debit side and goods imports on the credit side. The publication of the trade balance takes place according to the general / special trade, the breakdown primarily according to product groups (e.g. finished goods, raw materials, food) or countries or regions and is available as a monthly or annual report. Basically, the trade balance can take three forms:
- The balanced trade balance
When speaking of a balanced trade balance, this means that imports and exports have the same value when compared. But in reality this rarely happens, because such equality of values is extremely unlikely in view of the extensive and complex trade and movement of goods. Hence, a trade balance is always unbalanced.
- The positive trade balance
The positive (active) trade balance comes about when the value of exports exceeds the value of imports. This is also referred to as a trade surplus. A sustained trade surplus can have a positive, but also a negative impact on the economy.
A trade surplus enables exporting industries to invest and thus improve their technology and products. Due to the high export of goods, domestic production rises and the employment rate rises as well. But that only applies if the export surplus is not just due to a weakness in the domestic market. But at the same time, a country with a trade surplus will also become more dependent on its trading partners.
- The negative trade balance
This trade balance is the opposite of the positive trade balance. That means that here the exports are smaller than the imports and in this case a passive or negative trade balance is formed. This fact is also known as the trade deficit.
The history of the trade balance
The term trade balance found its first scientific approaches as early as the 17th century under the doctrine of mercantilism. During this time, special attention was paid to the accumulation of precious metals and money. It was less about the volume of these means of payment, but more about the active handling and use of them in foreign trade, which was studied and discussed. The trade was seen as the origin of the people’s wealth, with which the balance of trade became more and more attention in the course of time. The documents of the English merchant Thomas Mun are particularly popular in this context.
The preparation of the trade balance
In Germany, the trade balance is drawn up by the Federal Statistical Office and then published by the Deutsche Bundesbank. But before the movement of goods is entered in the trade balance and this is published, the raw data, which were determined by the Federal Statistical Office via the intra- and extra-trade statistics, must be corrected. This correction relates in particular to the representation by general and specialty trade on the processing and pure storage businesses as well as on the transport services.
General trade covers the entire movement of goods, including warehouse transactions, but excluding transit / transit traffic. Special trade, on the other hand, covers all goods which are intended for use, treatment and processing in Germany and which have been manufactured or treated or processed in Germany. Special trade thus includes goods that are imported from third countries and then remain in the EU. The difference to the general trade is that the special trade does not include any warehouse transactions.
The correction for warehouse transactions, transit, repairs and returned goods is made in the item “Additions to the movement of goods / merchanting”, in the balance of services for the transport and insurance costs.