The balance of trade in goods, also known as the visible balance or merchandise balance, measures the difference between what a country earns from selling physical products to other countries and what it spends on buying physical products from them during a specific period, usually one year.

Goods refer to tangible, physical items, such as:

• Manufactured goods: machinery, electronics, and vehicles.
• Agricultural products: food and raw materials.
• Textiles and clothing.
• Fuels and minerals.

Formula:

Balance of trade in goods = Value of exports of goods − Value of imports of goods

Possible outcomes:

• Trade surplus in goods: When exports are higher than imports.
• Trade deficit in goods: When imports are higher than exports.

A surplus indicates that a country is selling more physical goods abroad than it is buying. A deficit indicates the opposite. This balance is an important part of a country’s current account.