Balance of Trade (BOT)

Balance of Trade is the difference in value over a period of time between a country’s imports and exports of goods and services, usually expressed in the unit of currency of a particular country or economic union (e.g. dollars for the United States, pounds sterling for the United Kingdom, or euros for the European Union). It can be said to be the value of a country’s exports minus its imports.

When a country’s exports are greater than its imports, it has a trade surplus. Most nations view that as a favourable trade balance. When exports are less than imports, it creates a trade deficit. Countries usually regard that as an unfavourable trade balance. But sometimes, a favourable trade balance or surplus is not in the country’s best interests. For example, an emerging market should import to invest in its infrastructure. It can run a deficit for a short period with this goal in mind.