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Group 1
The balance of trade is the difference between the monetary value of export and imports of output in an economy over a certain period.
A favourable balance of trade is known as a trade surplus.
The country’s net international asset position increases .
An unfavourable balance of trade is known as a trade deficit
Trade gap where the net international asset position decreases.
The cost of production (land, labour, capital, taxes, incentives, etc.)
The cost and availability of raw materials, intermediate goods and other inputs;
Exchange rate movementsMultilateral, bilateral and unilateral taxes or
restrictions on tradeNon-tariff barriers such as environmental, health
or safety standardsThe availability of adequate foreign exchange
with which to pay for importsDemand and supply of the goods.
Domestic policies and subsidies
External pressures:
Export items facing heavy competition in international market results in market segmentation and low pricing and may lead to trade deficit.
Export items facing less competition in the international market create trade surplus as they fetch high prices.
No , trade deficit is relative to the business cycle and economy.
In a recession- countries export more, creating jobs and demand.
In a strong expansion import more providing price competition, limits inflation without increasing prices provides goods
beyond the economy's ability to meet supply.
Thus, a trade deficit is not a good thing during a recession but may help during an expansion.
the trade balance is likely to differ across the business cycle.
In export led growth (such as oil and early industrial goods), the balance of trade will improve during an economic expansion.
Canada, Japan, and Germany, China have trade surpluses due to high growth in economy.
The United States has high trade deficits as domestic consumption is more.
Also some economies may be unable to export enough goods to pay for its imports but is able to find funds elsewhere:
Service exports eg Hong Kong Foreign aid eg poor countriesTransfers from nationals working abroad eg
The Philippines, Bangladesh and Mexico
EXPORTSExports during October, 2009 were valued at US $
13193 million (Rs. 61639 crore) which was 6.6 per cent lower in dollar terms (minus 10.3 per cent in Rupee terms) than the level of US $ 14131 million (Rs. 68754 crore) during October, 2008.
Cumulative value of exports for the period April- October, 2009 was US $ 91048 million (Rs 439835 crore) as against US $ 123038 million (Rs. 533205 crore) registering a negative growth of 26.0 per cent in Dollar terms and 17.5 per cent in Rupee terms over the same period last year.
IMPORTS Imports during October, 2009 were valued at
US $ 21994 million (Rs.102759 crore) representing a decrease of 15.0 per cent in dollar terms (minus 18.4 per cent in Rupee terms) over the level of imports valued at US $ 25869 million ( Rs. 125868 crore) in October, 2008.
Cumulative value of imports for the period April- October 2009 was US $ 148367 million (Rs. 716535 crore) as against US $ 210864 million (Rs. 916483 crore) registering a negative growth of 29.6 per cent in Dollar terms and 21.8 per cent in Rupee terms over the same period last year.
OIL IMPORTS Oil imports during October, 2009 were
valued at US $ 6608 million which was 9.3 per cent lower than oil imports valued at US $ 7285 million in the corresponding period last year. Oil imports during April- October, 2009 were valued at US$ 42864 million which was 39.3 per cent lower than the oil imports of US $ 70570 million in the corresponding period last year.
TRADE BALANCE The trade deficit for April- October, 2009
was estimated at US $ 57318 million which was lower than the deficit of US $ 87827 million during April-October, 2008.
India is leading exporter of: gems and jewelry, textiles, engineering goods, chemicals, leather manufactures services.
India is importer of : Oil and oil products machinery, gems, Fertilizers chemicals.
Main trading partners are European Union, United States, China and UAE .
EXPORTS (including re-exports)
2008-2009 123038
2009-2010 91048
%Growth 2009-2010/ 2008-2009 -26.0
IMPORTS
2008-2009 210864
2009-2010 148367
%Growth 2009-2010/ 2008-2009 -29.6
TRADE BALANCE
2008-2009 -87827
2009-2010 -57318
*Figures for 2008-09 are the latest revised whereas figures for 2009-10 are provisional.
US MILLION
Country Total Trade Trade Balance
China PRP 163,202 -92,676
USA 155,353 12,254
United Arab Emirates 152,668 -1934
Saudi Arabia 105,602 -64303
Germany 67,602 -19497
Singapore 63,280 2934
UK 50114 524
Hong Kong 50,129 1772
Belgium 41552 -5294
Netherland 33099 19049
Source: Federal Ministry of Commerce, Government of India
