Published on: March 4, 2022
Trade Deficit of India is expected to increase
Scarborough TRADE DEFICIT
- Negative Balance of Trade
- Refers to the amount of international trade that takes place between countries throughout the world
- When a country’s imports surpass its exports in a fiscal year, it is considered to be a trade deficit
- When a country cannot produce what it requires and must import things from other countries while paying import taxes
- When businesses are involved in the production of goods in another country. The raw resources used in manufacturing are exported, whilst the final commodities brought into the country are imported.
- Raises the standard of living at first because residents have access to a wider range of things.
- If the trade imbalance remains, the government will have to obtain additional foreign exchange to close the gap, causing the local currency to fall.
- To close the import-export imbalance, a larger trade deficit necessitates the recruitment of foreign investors.
- Because more imports mean fewer job prospects, a bigger trade imbalance causes jobs to be outsourced to other countries.
- Demand for imported items leads to a decrease in demand for locally produced goods, resulting in factory closures and job losses.