THE IMPACT OF EXPORT AND IMPORT BALANCE ON THE COUNTRY'S ECONOMY

Abstract

This article investigates the critical role played by the balance of exports and imports—known as the trade balance—in shaping a country's economic trajectory. International trade dynamics significantly influence macroeconomic variables such as GDP, currency exchange rates, inflation, and employment levels. A trade surplus, where exports exceed imports, generally promotes higher GDP growth by increasing demand for domestically produced goods, strengthening the currency, and expanding employment opportunities in export-related sectors. Conversely, a trade deficit, characterized by higher imports than exports, may exert downward pressure on GDP, lead to currency depreciation, and challenge domestic industries, though it can also reflect strong consumer demand and access to competitive inputs for production. Current data from 2025 indicate that the United States, the world's largest economy, maintains a persistent trade deficit with goods imports surpassing exports by approximately $1.37 trillion annually, despite a surplus in services trade amounting to around $315 billion (U.S. Bureau of Economic Analysis, 2025). This deficit influences its currency valuation and trade policies. Additionally, global trade expanded by $300 billion in the first half of 2025, with a 14% rise in U.S. imports demonstrating robust domestic demand (USimportdata, 2025). The inflation rate is affected indirectly through currency value fluctuations driven by trade imbalances; a stronger currency usually lowers import prices and inflation, whereas depreciation may raise them. Employment trends are also tied to these dynamics, with export-driven sectors typically experiencing job growth while industries competing with imports face challenges (Verger Group, 2023). Thus, maintaining a balanced trade approach supports sustainable economic growth and stability, mitigating risks associated with pronounced surpluses or deficits in trade.