Trade glossary · measurement
Trade deficit
Imports exceed exports. The country buys more goods from abroad than it sells.
A trade deficit is financed either by services exports (US, UK), foreign direct investment, or external borrowing. Sustained deficits are not inherently problematic — the United States has run goods deficits for decades while remaining the world's largest economy. They become a concern when paired with hard-currency debt and slowing growth.
Examples
- United States: ~$1.1T goods deficit in 2023, partially offset by services surplus.
- United Kingdom: ~$245B goods deficit.
- India: ~$233B goods deficit driven by oil imports.
Related terms
Trade balance
A country's exports minus its imports. Positive is a surplus; negative is a deficit.
Trade surplus
Exports exceed imports. The country sells more goods abroad than it buys.
Current account
Balance of payments component covering goods, services, primary income (wages and investment income), and secondary income (transfers). Trade balance is one part of the current account.
Balance of payments
A country's accounting record of all economic transactions with the rest of the world, split into current account and capital/financial account.