SHAH ABDUL LATIF UNIVERSITY KHAIRPUR

MIRS
GROUP MEMBERS
MUSTAFA ALI NAREJO 17-54
MOHSIN ALI HULLIO 17-42
ALI RAZA BHUTTO 17-13
TAIMOUR HUSSAIN 17-98
BALANCE OF TRADE

INTRODUCTION

 BALANCE:
A STATE OF EQUILIBRIUM OR EQUAL DISTRIBUTION OF
WEIGHT,AMOUNT ETC.

TRADE:
THE ACT OR PROCESS OF BUYING ,SELLING OR EXCHANGE
COMMODITIES.
 BALANCE OF TRADE

• DEFINITION:
• IT IS THE DIFFERENCE BETWEEN A COUNTRY’S IMPORTS AND EXPORTS OVER
A PERIOD.
• CALCULATING BOT:
• BOT=VALUE OF IMPORT – VALUE OF EXPORT
COMPONENTS OF BOT

• THESE COMPONENTS OF THE BOT USED TO COMPUTE THE TRADE OUTPUT

AND THE RESULTS EITHER BE TRADE DEFICIT OR SURPLUS.
• CURRENT ACCOUNT
• FINANCIAL ACCOUNT
• CAPITAL ACCOUNT
• CURRENT ACCOUNT
USED TO RECORD THE INFLOW AND OUTFLOW OF GOODS BETWEEN NATIONS.
RECORDS PAYMENTS OF ALL EXPORTED AND IMPORTED GOODS THAT INCLUDE
RAW MATERIAL SUPPLIES AND MANUFACTURED GOODS.
• FINANCIAL ACCOUNT
THE FINANCIAL AC IS IMPORTANT TO EVALUATE THE CHANGE OF DOMESTIC
OWNERSHIP OF FOREIGN ASSETS. WHEN THE FOREIGN OWNERSHIP IS MORE AS
COMPARED TO THE DOMESTIC OWNERSHIP RESULTS IN A DEFICIT IN THE
FINANCIAL AC.
• CAPITAL ACCOUNT
IT MEASURES FINANCIAL TRANSACTIONS BETWEEN COUNTRIES IS KNOW AS
CAPITAL AC. IT INCLUDES THE PURCHASE AND SALE OF ASSETS, PROPERTIES AND
FLOW OF TAXES
TYPES OF BOT
1 2
Favorable BOT: Balance of trade is Unfavorable or Adverse BOT:
said to be favorable when total Balance of trade is said to be
value of exported goods of a unfavorable when total value of
country exceeds her total value of imports of goods of a country
imported goods. exceeds a total value of exports of
goods.
3
Equilibrium balance of trade :
Balance of trade is said to be
equilibrium when total value of
exports of goods of a company is
equal to her total value of imports
of goods.
 • INCREASE IN OIL PRICES
• HIGH IMPORTS
• LOW PRODUCTION
CAUSES OF • HIGH POPULATION
BOT DEFICIT • LOW QUALITY OF GOODS
• LOW CURRENCY VALUE
 • REDUCE IMPORTS
REMEDIES • GOOD QUALITY PRODUCTION

FOR • REDUCE USE OF OIL

• EXPORTS PROMOTION
IMPROVING • TARIFF RESTRICTIONS
BOT • LIMITED QUANTITY RESTRICTION ON IMPORT
GOODS
 CONCLUSION

• BALANCE OF TRADE IS USED AS A BENCHMARK/TOOL FOR A COUNTRY. IT

SHOWS THE ECONOMY OF COUNTRY EITHER STRONG OR WEAK AND IT ALSO
DETERMINES THE RELATIONSHIP WITH THE REST OF THE WORLD.