What does a Trade Balance tells about an economy and what are its benefits

Competitiveness of Industries

Trade surplus = strong , competitive industries. Example – Germany exports cars, machinery, chemicals

This tells us that

• German engineering is world class
• Manufacturing sector is strong and efficient
• Workers are highly skilled
• Technology / Innovation is advanced

Germany’s surplus reveals that it is a manufacturing / industrial economy

Export	Percentage	Why
Vehicles	20%	Engineering excellence
Machinery	15%	Industrial strength
Chemicals	12%	Advanced technology
Pharmaceuticals	8%	R&D investment

Benefits of having a Trade Surplus

• Increased Foreign exchange reserves
• stronger currency value
• Job creation and employment