How to Calculate Balance of Trade as a Percentage

bizfluent article image

Jupiterimages/Photos.com/Getty Images

Balance of trade, sometimes called trade balance, is the difference between the total monetary amount of imports and exports of a particular country. If this difference is a negative number, that means the country imports more than it exports and is running what is called a "trade deficit." A trade deficit is not necessarily a negative. If a country's economy is experiencing strong expansion, that country should import more goods to limit inflation. Balance of trade is often calculated as a percentage of a country's gross domestic product (GDP), and this calculation is relatively straightforward.

Determine the country's net imports for a specified period of time, usually one year. The U.S. Census Bureau will periodically release these statistics on its website. As an example, Country A has net imports of $200 million over a one year period.

Determine the country's net exports for the same period of time in step 1. Again, the U.S. Census Bureau periodically releases these figures. As an example, Country A has net exports of $300 million over a one year period.

Subtract the country's net imports from the country's net exports to calculate the country's balance of trade. In the example, subtract $200 million from $300 million. Country A has a balance of trade of $100 million over a one year period.

Determine the country's gross domestic product. Gross domestic product is determined by adding together a country's consumer spending, its investments, its excess of exports over imports and its government's spending. As an example, Country A has a gross domestic period of $30 billion.

Divide the country's balance of trade by its gross domestic product. Using the example, when you divide $100 million by $30 billion you get 0.033.

Multiply the result from step 5 to calculate the country's balance of trade as a percentage of gross domestic product. In the example, you would multiply 0.033 by 100 and 3.3. Country A's balance of trade is 3.3 percent of its gross domestic product.