Balance of trade is the difference between the value of exports and value of imports of goods of a country in a given period of time. Export of goods is entered as a credit item in balance of trade. Import of goods is entered as a debit item in balance of trade. It is also called as trade balance. Balance of that is said to be in balance when exports of goods are equal to the imports of goods, i.e. balanced balance of trade.

Surplus balance of trade arises if country’s exports of goods are more than its imports. Deficit balance of trade arises if a country’s imports of goods are more than its exports. Balance of trade is narrow concept and it may not show the international economic position of an economy. It gives partial picture of international transactions and it is less reliable. It does not include net invisibles, i.e. the difference between the value of exports and value of imports of invisibles (services) of a country in a given period of time.