Balance of Trade
What is Balance of Trade?
Balance of Trade is the comparison of a country’s total visible export with the total visible imports. If visible exports are more than visible imports, a country is said to have favourable balance of trade on the other hand if the visible imports exceed the visible exports, that country is said to have unfavourable balance of trade. It is not necessary for a country’s trade to balance with other countries but it is the overall balance of trade with other countries put together that is important.
A visible Trade Account can also be called the balance of trade. It is the physical or tangible commodity and receipts from the export of the tangible commodity e.g. Cars, Phones, Drugs, etc.
Invisible Trade Account is the payment made for services from other countries and receipts from services to other countries e.g. insurance, banking, tourism, etc.