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Reviewed by Jul 26, 2021| Updated on
Net exports are a measure of a country's total trade of goods and services. It is also known as the balance of trade. It is at after deducting the nation's import value from the export value and calculated for a specific period.
The resultant figure will either be positive or negative. Positive net exports enjoy a trade surplus, whereas negative net exports imply that the nation has a trade deficit. A comparatively lower currency exchange rate helps a nation's exports to be more competitive in price.
Net export is a crucial variable used in the calculation of a nation's Gross Domestic Product (GDP). When the amount of goods exported is more than the value of goods imported, the country has a positive balance of trade for a period.
When taken as a whole, this can, in turn, be an indicator of the savings rate of the country, future exchange rates, and to some extent, its self-sufficiency. The third variable is debated upon economists.
Some economists consider that running a consistent trade deficit harms the economy of a country. It gives domestic producers a scope to relocate overseas, create pressure to depreciate the nation's currency, and forces the interest rates to lower.
If a country's currency is volatile, its exports are more competitive in the global markets. Consequently, it encourages positive net exports. On the other hand, if a country has a stable currency, its exports will be costly, and consumers will move to cheaper local products leading to negative net exports.
Exports contain all the goods and services a country supplies or deliver to the rest of the world. It includes merchandise, transportation, freight, tourism, financial services, and communication. Exports include cases of re-exports as well.
As per the Indian Government's data released in December 2019, the country's overall balance of trade for the period April-November 2019-2020 stands at USD 57.66 billion. It includes both merchandises as well as the services.
On an individual note, the net exports of goods stare at a large trade deficit of USD 118.10 billion. The net exports of services enjoy a positive figure of USD 60.44 billion.
The year-to-date trade deficit has recovered when compared to USD 89.46 billion in its corresponding period of April-December 2018-19.