Trade deficit

A trade deficit arises when a country imports more goods than it exports. The opposite is a trade surplus.

Examples:

• USA: the world's largest trade deficit (~$800 bn/year). Imports far more than it exports (consumer goods from China, oil)
• UK: trade deficit (~£150 bn/year)
• Germany: trade SURPLUS (~€200 bn/year). Exports cars, machinery, chemicals

Is a deficit bad? Not necessarily. The USA has had a deficit for decades and is still the richest economy. A deficit means: other countries want to hold your currency (the dollar) – that signals trust.

But: if a country permanently imports more than it exports and borrows to pay for it, that can become problematic in the long run (as with Greece before the euro crisis).