Visible and Invisible trade

Invisible trade

• Trade in services only e.g. tourism, freight, insurance.
• Calculated for given periods of time, usually one year.
• Invisible balance= exported services value-minus imported services value.
• For example Tourists coming to Zimbabwe $25 million.
• Banking services provided by Zimbabwean banks to foreigners $56
• Tourists from Zimbabwe to other companies. $14 million
• Banking services provided to Zimbabweans in other countries. $ 117 million.
• The invisible balance= (25+56) – (14+17)
• $50 million.
• In this case the invisible balance is said to be favourable.
• A favourable balance is also called a surplus.
• This means Zimbabwe exported more services than it imported.
• If the balance is negative it is said to be unfavourable.
• An unfavourable balance is also known as a deficit.
• This would mean Zimbabwe imported more services than it exported.

Visible trade

• is trade in goods only e.g. minerals such as diamonds.
• It is calculated for a given year.
• Visible balance ( Balance of trade)= Exported goods value-imported goods value
• For example in a given year:
• Zimbabwe exported goods to other countries worth $4.9 billion.
• It imports goods worth $9 billion.
• The balance of trade (BoT)=4.9-9
• $-4.1 billion.
• This is an unfavourable balance.
• It is also known as a deficit.
• It means Zimbabwe exported less goods ( in value terms) than she imported.

To access more topics go to the Commerce Notes page.