What is trade deficit?
A trade deficit is an amount by which the cost of a country's imports exceeds its exports.
The trade deficit in goods shows a rise of demand in the economy.
It is a part of the Current Account Deficit.
It's also called a negative balance of trade.
How it occurs?
Economic growth: When the economy of a country grows and strengthens, consumers have more wealth to purchase goods from overseas, which will increase the trade deficit.
An increase in government spending can mean a country's savings diminish, increasing the trade deficit.
Changes in the exchange rate
Limits of production
Trade policies
Recently in news
India’s merchandise exports fell 10.3% in May, while imports contracted at a slower 6.6% rate, lifting the trade deficit to a five-month high of $22.1 billion.
This is the sixth time in the last eight months that goods exports have declined year-on-year.
This is the first time that the goods trade deficit — which hit a 20-month low of $15.46 billion in April — has crossed the $20 billion mark since December 2022.
Persisting geopolitical tensions and monetary tightening induced recessionary fears – that have triggered a decline in consumer spending across advanced nations.
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