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.
Based in Halifax, Nova Scotia, Jordan Whitehouse has been writing on food and drink, small business, and community development since 2004. His work has appeared in a wide range of online and print publications across Canada, including Atlantic Business Magazine, The Grid and Halifax Magazine. Whitehouse studied English literature and psychology at Queen's University, and book and magazine publishing at Centennial College.