What is a trade surplus?

A trade surplus occurs when a country exports more goods and services than it imports. This situation indicates that a country is selling more to other countries than it is buying from them, leading to a net inflow of financial resources. A trade surplus can signal economic strength, as it reflects competitiveness in the global market and can contribute positively to the national economy by increasing employment and production within the country.

The presence of a trade surplus is often seen as beneficial, as it can help to accumulate foreign reserves and strengthen the national currency over time. Additionally, consistent trade surpluses can influence government policy and economic strategy to promote exports even further, knowing that there is a healthy demand for domestic goods and services abroad.