trade deficit


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Unfavorable Balance of Trade

The difference between the value of a country's exports and the value of its imports such that imports exceed exports. Analysts disagree on the impact, if any, of an unfavorable balance of trade on the economy. Some economists believe that an unfavorable balance of trade, especially if sustained, causes unemployment and lowers GDP growth. Others believe that the balance of trade has little impact, because the more international trade occurs, the more likely it is that foreign companies will invest in the home country, negating any negative effects. An unfavorable balance of trade is also called a trade deficit.

trade deficit

The amount of goods and services that a country imports that is in excess of the amount of goods and services it exports. Large trade deficits may result in unemployment and a reduction in economic growth in the country with the deficit. Compare trade surplus.
References in periodicals archive ?
China has been the principal source of Pakistan's trade deficit. In FY15, the trade deficit with China was $8.05 billion, which made up 36.31% of Pakistan's total trade deficit.
He said that the government also missed the trade deficit reduction target by $5.8 billion, although the gap between exports and imports shrank by over 15 percent.
The reduction in trade deficit would help in controlling current account deficit of the country, which had touched historic $18 billion last year.
Mechanical machinery and equipment were also a large contributor to the overall trade deficit with the EU, worth $2.3 billion in the March 2019 year.
However, the National Economic and Development Authority (Neda) said hope springs eternal for the Philippines as certain developments, most notably the conclusion of the Regional Comprehensive Economic Partnership (RCEP) agreement this year, will help the country boost its exports and narrow its trade deficit.
Particularly galling for the Trump administration is the increase in the trade deficit with China, which rose 12 percent to hit a new record at $419 billion last year despite punishing tariffs levied on that country's exports to the U.S.
Last year's trade deficit paid for smartphones, kitchen appliances, clothing, auto parts and a whole range of goods that were made more affordable because of China's lower manufacturing costs.
On a month-on-month basis (MoM), trade deficit posted an increase of 4.1% to $2.5 billion compared to $2.4 billion in December last year driven by a rise in imports MoM to $2.5 billion in January.
The wider trade deficit resulted in a ballooning current account deficit as more dollars were being spent for importation.
In 2003, for example, when the country was on the cusp of emerging from a near crippling collapse of growth, the trade deficit came in at $361 million.
On year-on-year basis, the services trade deficit also shrunk by 40.33 percent as the imports fell by 23.18 percent while the exports recorded a nominal decrease of 0.23 percent during November 2018 as compared to same month of the year 2017.
"We think the trade deficit in the Philippines will continue to expand over the coming year, putting further downward pressure on the peso," said the firm.