Balance of trade

The balance of trade refers to the national accounts to foreign trade, ie the cross-border movement of goods a country. It is a computational comparison of all merchandise imports ( imports ) and exports ( export ) an economy within a given period and is therefore also called the foreign trade balance, current balance or merchandise trade balance. From the trade balance of a country arise with their payment imbalance receivables or liabilities to non-residents.

The trade balance is paramount in the current account and is considered the most important adverse balance. As part of the current account - and thus also part of the balance of payments - it provides an important basis for economic policy decisions and actions.

• 3.1 Germany
• 3.2 Austria
• 3.3 Switzerland

• 4.1 Partner Country
• 4.2 review
• 4.3 Temporal Allocation
• 4.4 methodology

• 6.1 trade surplus
• 6.2 effects of currency depreciation under flexible exchange rates
• 6.3 delays
• 6.4 Monetary Union / Europe
• 6.5 Examples

History

First scientific approaches, the term used in the trade balance in the 17th century, under the doctrine of mercantilism. Particular attention was paid during this period to the accumulation of precious metals and money. Less the volume of means of payment, rather than the active handling and their use in foreign trade have been studied and discussed. The deal was seen as a source of national prosperity, bringing the trade balance played an ever-growing attention over time. In particular, the papers of the English merchant Thomas Mun are often cited in this context.

Structure and forms of trade balance

The trade balance mainly represented in the vertical format is divided into debits and credits. On the downside, exports of goods are recorded on the credit side, imports of goods in terms of value. The publication is based on General / Special trade, the structure primarily by commodity groups (eg, food, raw materials, finished goods ) or countries or regions and is available as a monthly or annual proof. The balance of trade can have basically three forms: Balanced, positive or negative trade balance.

Trade balance (export = import)

Do the exports in value terms exactly imports, it is called a positive trade balance. Due to the rain mostly goods of the countries, however, such a balance is highly unlikely.

Positive trade balance ( exports> imports )

If the sum of exports ( exports ) the sum of imports ( imports of goods ), the result is an active and positive trade balance. This condition is also referred to as trade surplus. If the export revenue on the import spending, the result is a credit balance. This one goes in the scale -like balance of payments a with a positive sign. A trade surplus leads in the context of the current account to a capital outflow. This is also referred to as a positive net export. The economic effects are economic effects in the section: trade surplus described.

Negative trade balance ( exports < imports)

In the opposite case, ie when imports exceed exports, it is called a passive or negative trade balance and the balance of trade deficit. The resulting debit balance then goes with a negative sign in the balance of payments. The import expenditures are higher than export earnings. A trade deficit represents a capital inflow, which is also referred to as a negative net export.

Creation

Germany

The trade balance is created by the Federal Statistical Office and published by the Deutsche Bundesbank. Community and external trade statistics (third countries on Customs Administration) determined raw data correction are subjected: Before the goods recorded in the trade balance and this can be published, the Federal Statistical Office on the intra- ( € 300,000 in the EU direct registration of companies reporting threshold ) must. This correction relates particularly, in relation to the representation by general or special trade, on refining and pure storage businesses, as well as transportation services.

The general trading covers trade in all products, including storage business, but without transit / transit. The specialty shops, however, includes all goods that are intended for use, processing or working in Germany, manufactured in Germany and worked or processed. It includes such goods imported from third countries and then remain in the EU. In contrast to the general trade, however, the special trade does not include warehouse stores.

The correction for stock operations, transit, repairs and returned goods carried under the item " supplementary trade / merchanting ", the. Transport and insurance costs in the services account

Austria

The usually designated as a foreign trade statistics in Austria 's trade balance is by STATISTICS AUSTRIA ( Bundesanstalt Statistik Austria ) and publish it and will be presented as part of the balance of payments in the publications of the Austrian National Bank. Just as in Germany in three blocks, the Austrian Data collection is carried out by two methods ( Ex-/Intrastat and correction). In the EXTRASTAT STATISTICS AUSTRIA recorded trade with third countries. The survey carried out by notification of the customs authorities. Flow of goods within the EU are listed in Intrastat. The determination is made on the direct survey of companies which - are required to submit detailed monthly reports - depending on the threshold. The correction is made ( from a national perspective ) also in terms of indirect imports and exports ( transit trade ), excluding commission processing and allocation of monetary gold. The presentation of the balance of trade is done by special trade.

Switzerland

In the Swiss Confederation, the Swiss Federal Customs Administration (FCA ) takes over both the preparation and the publication of foreign trade statistics. Although Switzerland is located in Central Europe and is surrounded by four Euro countries, it is not a member of the European Union. The Switzerland consequently does not have two trade statistics ( Intra-/Extrahandel ), but refers all their data from their customs declarations. It is the specialty retail concept tracks, detects which all goods from a value of 1,000 Swiss francs ( CHF ) and more than 1,000 kg ( m / l / pcs). Included is the processing trade, but not the transit and storage traffic. The Swiss survey area includes not only the Swiss territory with the exception of the valleys Samnaun and Sampuoir, but also the Principality of Liechtenstein and the enclaves of Büsingen and Campione d' Italia.

Asymmetries

The balance of trade between two countries can vary greatly due to different recording and measurement methods. Thus, the German export values ​​in the United States, seldom equal the import values ​​of the United States from Germany. These differences are based on different causes and increase with distance and level of detail of the study countries:

Partner country

As the most important factor of uncertainty the partner country specification is considered. While exports the trade balance are recognized by country of destination ( final destination of the goods), there are two different procedures for imports. Germany, Austria and Switzerland use here the proof of the country of origin ( Country / Country last significant change ). However, it is also possible the elevation of the exporting country (country from which the goods came / interim storage in the survey area ). The will, however, usually only be used, if the country of origin is not known. Problems of a mirror-image comparison arise especially when it is unclear when the message appears to be the country of destination to which the goods exported and initially supplied to an intermediary in another country. Equally problematic is the indirect import. This process, referred to as the "Rotterdam effect", describes an intra-Community transfers - such as within the EU - of goods from third countries. Are particularly affected countries at the external borders of the EU, ie where the goods are covered by customs.

Assessment

With regard to the types of evaluation must be made between month and year version version here. Exports are generally valued in Germany to FOB while imports depending on the display type to FOB (annual version) or CIF values ​​( month version ) are recorded. This results in the monthly version to that in the transnational trade balance comparison of the export value of country A does not match the value of imports from country B. To avoid this discrepancy, and in accordance with the rules of the International Monetary Fund, the German Federal Bank in record from both the A - and the export values ​​to FOB. Similarly, the Austrian National Bank 's approach to the annual preparation of the Austrian balance of payments. This is subject to an aggregate calculation and reported imports as in Germany to FOB. In the external trade statistics of Statistics Austria, exports are always displayed on FOB and CIF imports to and month not be corrected in the annual reports. This gives rise to asymmetries between the trade balance by the Austrian National Bank and the STATISTICS AUSTRIA. In Switzerland Exports are recorded on FOB and CIF imports to.

This means that the transportation and insurance costs between the customs borders do not always show up in the annual version of the trade balance, but are assigned depending on the representation of the services account and considered as foreign service. While this means - because of the often difficult obtaining information of the exact costs - a major effort, but at the same time also allows a better international comparison. The balance of trade - as well as the services account - and their comparability, therefore, is dependent on which valuation techniques are used and how far the partner countries apart. The current account balance is, however, not affected. The assessment of the goods, however, also arise with regard to differences of customs and tax collection as well as the methods of conversion of currencies. The recognition of the values ​​of commodities takes place within the EU, including Switzerland, without customs duties and taxes; Currencies are translated at the exchange rate in Germany of the reporting date, the Switzerland the goods valued at the foreign exchange selling rate of the previous day's declaration.

Temporal Allocation

The detection of different goods is mostly due to long transport times. Such assignments can thereby move by months or even years.

Methodology

Country-specific methods concerning the evaluation of software and the estimation method ( imputation and extrapolation ) for non-response and loss by mandatory reporting thresholds also affect the comparability of trade balances. So is a German company, its respective Send or input scope in the previous year € 300,000 ( threshold in Austria since 2007: € 300,000 ) has not been exceeded, exempt from the reporting requirement. However, this does not mean that the value of goods in the partner country is not accounted for.

Costs incurred after the posting of the import and export asymmetries and the trade balance are thus not necessarily due to the real goods. The above mentioned causes act directly on the foreign trade statistics and can distort to some degree. A central role in the representation of the actual movement of goods also play the prices that are charged for the imports and exports. In the transnational exchange of goods in international companies an undervaluation of goods from tax and customs reasons, for example, widespread. The so-called intra-group transfer prices are therefore not representative of the real goods trade relationship between the countries. In addition, the ratio of the prices of export and import goods and the exchange rates must be considered. If the export of 100 high-priced capital goods, an import of cheap raw materials compared to 100, the result is a surplus. This is not due to the quantitative traffic, but on the goods prices and exchange rates. In this context, a consideration of the terms of trade is reasonable. These show the real exchange ratio of exported and imported goods, so the change of export prices to import prices.

Influences

The foreign trade of a country is determined by several factors. These are rare and isolated all require tend to offset each other. They cause and are part of a cycle, the, is rarely precisely predictable due to the complex economic mechanisms. The following are the most important influencing factors are shown on the trade balance.

Depending on the volume of exports of:

• Abroad: economic, real incomes, economic policies, duties, imports, exports
• Macroeconomic shocks (commodities, demands, etc.)
• Commodity prices (domestic currency)
• Exchange rates
• Export and import elasticities
• Competitiveness
• Domestic production potentials, monetary and fiscal policy
• Trade agreements

Depending on the volume of imports from:

• Abroad: economy, economic policies, production
• Macroeconomic shocks (commodities, demands, etc.)
• Goods prices ( foreign currency)
• Exchange rates
• Export and import elasticities
• Domestic demand
• Domestic production potentials, monetary and fiscal policy, GDP, real income
• Tariffs and trade agreements

Economic Effects

Trade surplus

Main article trade surplus

A rising and / or permanent trade surplus may have an economy, both positive and negative effects. The increasing exports by the high domestic production leads in itself to a decline in unemployment, because if the reasons for the trade surplus does not lie in a weakness of the internal market. Furthermore, it allows any excess of export industries to invest in their production and technologies, which in turn improves the international competitiveness of this country. At the same time also increases the dependence of the exporting country of the economy and the economic policies of its trading partners.

Effects of currency depreciation under flexible exchange rates

Main article trade deficit

Assuming two countries or economic areas that have different currencies, such as U.S. and Europe. Assigns the trade balance of a country ( Euro country) a deficit, this means that it must be between finance this deficit with its trading partners (USA). This arises next interest payment obligations for this country, an increased demand for foreign currency (dollar ) and an excess supply of domestic currency ( Euro ). One way for Europe is the depreciation of the euro balance of its HB deficit. A rise in the nominal exchange rate ( direct quotation ) has the consequence that the price of goods from the United States is increasing in units of European goods, conversely, goods from Europe are more favorable to the United States. If the market now has a high elasticity of demand, the volume of goods to be short-term with the change in the exchange rate correct ( Robinson condition). As a result, exports will rise from the euro area, as they have become cheaper for foreign countries, and imports fall due to the relative price increase. Is the extent of the increase in exports and the large decline in imports strong enough to compensate for the rise in import prices, the trade balance will improve in the wake of the euro devaluation (Marshall - Lerner condition ). Disadvantages of a devaluation are primarily in the increase in the domestic price level and the export of recession and unemployment to the neighboring country by the appreciation of the foreign currency. Benefits could the shift of foreign and domestic demand towards domestic goods, a resulting increase in domestic production and, ultimately, a decline in unemployment, and therefore be a positive impact on the domestic economy.

Traces the government in addition to the balance of the trade balance (surplus or deficit ) have other objectives, such as a stagnation of domestic production, the additional use of fiscal measures is necessary. Also can have effective effects on trade imbalances and the economy monetary policy interventions of the central banks.

Delays

The improvement in the trade balance by one, as described above, devaluation of the euro is due to different reaction times rarely an immediate process. In foreign trade, particularly the delay in the adjustment amount is observed. The reasons for this are contractual bonds of the company, time-consuming search for cheaper suppliers and delayed consumption adjustment. This can have the consequence that the compensatory effect on the trade balance after a short-term deterioration of these sets. This process is also referred to as J-curve effect. In an appreciation of the currency, however, a walking stick effect can be observed by different price and volume reactions.

Monetary Union / Europe

By joining the European Economic and Monetary Union ( EMU) and the associated relocation of the national currency and monetary policy to the supranational level of the European Central Bank ( ECB), is for each country one described above, individual devaluation of the (national) currency become impossible. Although remains of the euro against the countries which have its own independent currency, flexible, but not within the euro area. Since any action the ECB always affect all member countries of the EMU, occur particularly on conflicts when regional imbalances within the monetary union arise. This forces the countries, but also the European Union to modify its economic adjustment mechanisms. A trade deficit could be, with flexible exchange rates, offset by a devaluation of the currency or an expansionary monetary policy absorb and possibly the associated decline in domestic production, rising unemployment, economic downturn and trend towards a recession. The elimination of the exchange rate within the limits of EMU these countries, however, only limited state countermeasures to an economic downturn remain to prevent. Will be discussed in this context, especially the reduction of nominal wages to increase the competitiveness of the country concerned, labor migration, and an expansionary fiscal policy.

Examples

A heavily affected country in the euro area in recent years, for example, Italy. With a GDP growth of only 1.9 % in 2007, it is one in economic terms to the " laggards " in Europe. The country, which - also due to the devaluation of the lira - in the 90 years through its exports still recorded a market share of around 5% had to fight in the last few years with a weak domestic demand, high unemployment and a persistent trade deficit. The main causes of the strong trade relations with Germany, above average high taxes, declining real wages, rising energy costs, outdated technologies were seen by below-average investment and the great need for reform in tax, pension and social security system. As a countermeasure, Silvio Berlusconi promised after his election in April 2008, the future to operate an expansionary fiscal policy. Tax cuts and increased government spending in the family and the energy sector should boost private consumption.

The German trade balance, however, for decades has been on surpluses. "As an export nation, Germany has traditionally export surplus on. Merely in the early years of the Federal Republic of 1950 and 1951 saw the German foreign trade statistics, an import surplus ." In 2006, the German trade surplus around € 159 billion,

In 2007, Germany a " record profit " of € 196.5 billion. In 2008 there were 176.2 billion euros; economic crisis in 2009, there were € 134.2 billion. According to a forecast of the Association of Wholesale and Foreign Trade (BGA ) the trade surplus will amount to 143 billion euros in 2010.

Many countries, such as the People's Republic of China, paralyze the above market mechanism, by linking their currency to an anchor currency (eg U.S. dollars). This China secures its strong positive balance of trade with the United States. With a negative trade balance these effects occur vice versa.

Germany's current account