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Trade Deficit UPSC NOTE

 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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Learnerz IAS | Concept oriented UPSC Classes in Malayalam: Trade Deficit UPSC NOTE
Trade Deficit UPSC NOTE
Learnerz IAS | Concept oriented UPSC Classes in Malayalam
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