What is Trade Balance?

The trade balance is a record of entries and exits in the country’s economy, through its exports and imports. While in exports the country sells goods abroad, in imports there is the consumption of goods that come from abroad.

The value of exports minus imports forms the balance of trade. If there are more exports, this result is positive and the country had a surplus in the period, and if it is negative, the country had a deficit.

Brazilian trade balance

Brazilian trade balance data are released every month by the Ministry of Economy’s Foreign Trade Secretariat.

Historically, Brazil exports more than it imports, almost always generating a favorable result for the trade balance.

Accumulated trade balance

Balance of trade balance in 2020 (values ​​in US $ billion FOB)
Month Monthly exports Accumulated exports Monthly imports Accumulated imports Monthly balance Accumulated balance
January 14,540 14,540 16,176 16,176 -1,636 -1,636
February 15.702 30,242 13,255 29,431 2,447 0.811
March 18,807 49,049 14,519 43,950 4,288 5,099
April 18,312 67,361 11,611 55,561 6.701 11.801

In 2019, the Brazilian trade balance accumulated a positive balance (surplus) of US $ 48.036 billion.

The monthly and accumulated results for the trade balance in 2019 can be seen in the table below:

Balance of trade balance in 2019 (values ​​in US $ billion FOB)
Month Monthly exports Accumulated exports Monthly imports Accumulated Imports Monthly balance Accumulated balance
January 18,002 18,002 16,388 16,388 1,614 1,614
February 15,737 33,739 12,622 29,010 3,116 4,730
March 17.429 51,168 13,133 42,143 4,296 9.025
April 19,282 70,450 13,629 55,771 5.653 14,679
May 20,592 91,042 14,968 70,739 5.624 20.303
June 18.406 109,448 13,029 83,768 5.377 25,680
July 20,151 129,599 17,759 101,527 2,391 28,072
August 19,670 149,269 15,570 117,097 4,100 32,171
September 20,298 169,567 16,495 133,592 3.803 35,974
October 19,577 189,144 17.027 150,620 2,550 38,524
November 17,737 206,881 14,172 164,792 3,565 42,089
December 18,503 225,383 12,556 177,348 5.947 48,036

In 2018, Brazil had a trade surplus of US $ 58.033 billion. This balance was the result of US $ 239.264 billion in exports and US $ 181.231 billion in imports of goods.

See the table with the balances of the last years:

Brazilian trade balance (values ​​in US $ billion)
Year Exports Imports Balance
2018 239,264 181,231 58.033
2017 217,739 150,749 66,990
2016 185,232 137,586 47,646
2015 190,971 171,459 19,512
2014 224,974 229,128 -4,153
2013 241,968 239,681 2,286
2012 242,277 223,367 18,911
2011 255,936 226,244 29,692
2010 201,788 181,775 20,013
2009 152,911 127,812 25,098
2008 197,779 173,119 24,660
2007 160,522 120,475 40,046
2006 137,708 91,193 46,515
2005 118,693 73,468 45,224
2004 96,332 62,745 33,588
2003 72,975 48,270 24,705
2002 60,290 47,140 13,150
2001 58.128 55,445 2,684
2000 55.018 55.891 -0.873

How the trade balance is calculated

The trade balance is a component of the balance of payments and refers to the exchange of goods between residents in the country and non-residents who are trading partners.

The balance of trade balance indicates the flow that occurred in the period considering the purchase and sale of goods with the rest of the world.

To calculate the amount that corresponds to the balance, you must do:

  • Balance of Trade Balance = Exports – Imports

Of this balance, the trade balance can be classified as having a trade surplus or trade deficit when:

  • Trade surplus: Exports> Imports
  • Trade deficit: Imports> Exports

Having a trade surplus can be good for the country, since there is a greater demand for domestic products by foreign consumers. A very high surplus can contribute to the appreciation of the currency.

Otherwise, a trade deficit occurs when the quantity of foreign goods demanded is greater than sales to other countries, which can make the exchange rate more expensive.

From the division between exports by imports, the percentage for the coverage rate is calculated. This indicator shows how much of the exported value covers what has been imported.

For example, in the 2018 result, exports were US $ 239.3 billion, while imports of goods reached US $ 181.2 billion. This means that there was a trade surplus in the period:

Exports $ 239.264 billion
Imports $ 181.231 billion
Balance of trade balance $ 58.033 billion
Coverage rate 132.02%

In this case, the value of exports covered imports by 132.02%, indicating a positive balance for the country.

If this figure is below 100%, exports are not sufficient for the country to cover what has been spent abroad.

Balance of payments trade balance

The export and import records do not summarize all the interaction that the country’s economy has with other countries, as there are other operations that involve exchanging money with the rest of the world.

All transactions between residents and non-residents are recorded in the balance of payments.

The trade balance is part of the country’s current transactions and shares space with service records, transfers of primary and secondary income.

In addition to current transactions, the balance of payments records the capital account and the financial account.