Trade Deficit
What is Trade Deficit?
When a country imports more goods and services than it exports.
Understanding Trade Deficit
A trade deficit means a country buys more from abroad than it sells. It is matched by foreign investment flowing in, such as foreigners buying the country's bonds, shares, or property.
Trade balances reflect saving and investment: a country that invests more than it saves will tend to run a deficit. A deficit can be healthy if it funds productive investment, or a concern if it funds consumption with unstable borrowing.