A trade balance deficit (also known as a foreign trade deficit , negative (external) trade balance or trade gap) occurs when the value of goods imported ( import ) exceeds goods exported ( export ) in a certain period (import surplus). The balance of the trade balance for this period then has a negative sign in the current account . In this case one speaks of a passive trade balance or a passive balance of the trade balance. When an economy has a current account deficit, the country's net external position ( net external assets ) decreases ; H. for a net debtor country, the net debt to the rest of the world increases; for a net creditor country, its net debt position to the rest of the world is reduced.
The reverse case - when more is exported than imported - is known as the trade surplus .
Classification and further explanation
|Balance of payments||I. Current account||trade balance|
|Earnings and property income|
|II. Transfers of assets|
|III. Financial account||Direct investment|
|IV. Change in currency reserves at transaction values|
|V. Balance of statistically non-breakdown transactions|
The trade balance is the arithmetical comparison of the import and export of all goods in an economy within a certain period of time. The exported goods are valued at “fob” prices (free on board); the imported goods with the “cif” value (cost, insurance, freight). The evaluation at these Incoterm prices make the figures internationally comparable, since the goods are recorded with the value at their own national border.
The trade balance is a partial balance of the current account, which in turn is part of the balance of payments . The balance of payments is the systematic, value comparison of all economic transactions , expressed in money , during a certain period between an economy and abroad.
If an economy regularly reports negative trade balances, this means that foreign debts are growing and higher interest rates have to be paid. The debt arises because the expenses for imports exceed the income for goods exports. This creates a need for foreign currency and an oversupply of domestic currency, which is thus devalued . Since the goods can consequently be imported more cheaply abroad, the trade balance deficit is reduced according to the model and a trade balance adjustment occurs .
Deterioration of the trade balance from a macroeconomic model point of view
The following influencing factors lead to a deterioration in the trade balance. If there is already a trade deficit, the following factors, ceteris paribus , lead to an increase in the deficit:
- Rising prices for domestically produced goods (less can be exported because foreign countries have to pay more)
- Changes in exchange rates
- A devaluation of the domestic currency initially leads to a deterioration and later to an improvement in the trade balance. ( J-curve effect )
- Changes in real income (at constant exchange rates)
- Rising real domestic income (more is imported)
- Falling real income abroad (foreign countries buy fewer goods; fewer are exported)
- Increasing domestic demand for goods (a large part of the additional goods in demand is imported from abroad)
- Trade agreements or barriers (export quotas and export embargoes prevent possible exports).
The reverse effects lead to an improvement in the trade balance and possibly even to a trade surplus .
A paper by members of the European Parliament draws attention to the rising trade balance deficit due to import costs for fossil fuels, which in particular is also worsening the debt crisis in the EU countries. The import dependency cost the 27 EU countries between October 2010 and September 2011 408 billion euros. In contrast, the current account deficit in the same period was only 119 billion euros.
Countries with a trade deficit
The following table shows the development of the net exports of selected economies that showed a trade deficit in 2007.
|European Union||k. A.||116||-76|
|Portugal||- 4th||- 8||-15|
|Australia||1||- 2nd||- 7th|
|Luxembourg||- 1||- 2nd||- 4th|
The US trade deficit
The United States of America - currently the largest economy in the world - has regularly had a trade deficit since the 1970s, which has grown sharply since the 1990s. In 2007, the deficit decreased somewhat for the first time in a long time. The foreign trade balance rose by US $ 27 billion to US $ 790.1 billion. The shortfall has to be financed by capital inflows from abroad, which means that the US is becoming increasingly indebted to foreign countries.
There are several reasons for the large trade deficit. There are three of them:
Reason 1: High economic growth in the USA
In the second half of the 1990s, the US's average economic growth was well above that of its trading partners. American imports increased significantly more (rising demand due to the increase in GDP) than exports, which depend on GDP and thus on the demand of trading partners. Constantly increasing economic growth does not necessarily have to lead to a negative trade balance. In the case of the United States, however, domestic demand (consumption and investment) increased significantly more than foreign demand for American goods. This resulted in a steadily growing trade deficit.
Reason 2: steady real appreciation of US goods
With a constant multilateral real exchange rate and strong economic growth, the trade balance deteriorates. As mentioned in Reason 1 , there has been strong annual economic growth in the USA since the mid-1990s. Since the real exchange rate actually rose until 2002, the trade balance deteriorated all the more. From early 2006 to late 2015, the U.S. trade deficit totaled $ 7,201 billion. That was an average of $ 720.1 billion a year.
Reason 3: Americans prefer foreign goods
American consumers prefer to buy foreign goods (e.g. cars) and ask less for domestic goods.
- Oliver Blanchard, Gerhard Illing: Macroeconomics . 4th edition. Pearson Studium, Munich 2006, ISBN 3-8273-7051-5 .
- Paul R. Krugman, Maurice Obstfeld: International Economy: Theory and Politics of Foreign Trade . 7th edition. Pearson Studium, Munich 2006, ISBN 3-8273-7199-6 .
- Dieter Brümmerhoff : National accounts . 7th edition. Oldenbourg, Munich / Vienna 2002
- Klaus-Dieter Schroth: The little lexicon of foreign trade . Publishing house economy and finance, Düsseldorf 1993, ISBN 3-87881-081-4 .
- Stormy-Annika Mildner: USA. Economy and finance . Cape. "The US Current Account Deficit". In: Peter Lösche (Ed.): Country Report USA. History, politics, economy, society, culture. 5. new. Ed. Federal Agency for Civic Education , Bonn 2008, ISBN 978-3-89331-851-3 , pages 543-578, (with graphics. Numerous reference in the notes p 822-828)
- Klaus-Dieter Schroth: The small encyclopedia of foreign trade . Düsseldorf 1993, p. 225
- Dieter Brümmerhoff: National accounts . Munich 2002, p. 164
- Dieter Brümmerhoff: National accounts . Munich, 2002, p. 165
- Klaus-Dieter Schroth: The small encyclopedia of foreign trade . Düsseldorf 1993, p. 425
- Sven Giegold MEP, Sebastian M. Mack: ( Memento from January 16, 2014 in the Internet Archive ) (PDF; 13.5 MB)