What is the trade surplus?

Did you know that the superavitis it a situation that is very positive for the economic and financial situation of a country? In effect, when we speak of surplus we are referring to the phenomenon that occurs when income is greater than expenses. We find different types of surplus, among which the foreign surplus stands out and, specifically, the trade surplus. Do you want to know what this concept means and what role does it play in balance of trade from a private entity or public institution? Then do not hesitate to read on.

What is the trade surplus for?

The trade surplus or positive trade balance marks the positive difference between exports (what a country sells abroad) and imports (what that same country buys from other nations). In other words: when the number of exports is greater than that of imports, when a country sells more than it buys.

As you may have already guessed, the trade surplus (which is precisely the opposite of the the commercial deficit) is a very positive indicator for foreign trade, since it reflects the economic and financial boom of the country in question.

Advantages of the trade surplus

Why do all countries strive to achieve a trade surplus in their exports? For the following reasons:

  • Countries with trade surpluses are in a position of competitive advantage over the rest, in addition to granting it a not inconsiderable political and economic influence.
  • The country that has a positive trade balance has a better chance of encouraging and developing its economy.
  • Thanks to surplus reserves, you can invest or buy bonds in other countries.
  • Trade surpluses can be used to invest in machinery and production lines, so that this state of surplus is maintained over time.

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