Persistent Trade Deficit

The persistent Trade deficit is a situation where a country imports more than what it exports at any given period (Reinbold,2019). This is also referred to as the negative balance of trade. Persistent Trade Deficit should be a matter of grave concern to any nation. This is because importing more than what is exported from the country affects the nation’s economy. This will mean that such a country will have to borrow more from other countries of international institutions such as the international monetary funds to fund its deficits. This puts a country into debts that would cost it while paying. It will all the revenues collected to pay for debts instead of developing the nation in job creation or infrastructural development.

A country that relies heavily on imported manufactured goods and only exports raw materials experiences what is known as a persistent trade deficit. Such a country will experience a decline in employment in manufacturing companies as there will be no jobs to be done in such industries. Unemployment will lead to low life expectancy in the citizens of such a country. A country with a trade deficit will also experience lower trade domestic products due to low production levels. this will cause the domestic currency of such a country to be so weak, making it have a low, competitive advantage in foreign exchange for its businesses on the international market.

References

Reinbold, B., & Wen, Y. (2019). Historical US Trade Deficits. Economic Synopses, 13, 1-25.

Irwin, N. (2018). What Is the Trade Deficit?. The New York Times.