What does the trade balance in a current account represent?

The trade balance in a current account represents the difference between a country's exports and imports of goods and services. When a country exports more than it imports, it has a trade surplus, meaning it earns more money from selling its products to other countries than it spends on buying foreign products. Conversely, if a country imports more than it exports, it has a trade deficit, leading to a situation where it spends more money on foreign goods than it earns from selling its own. For example, if a country sells cars worth $100 million to other countries but buys electronics worth $120 million, it would have a trade deficit of $20 million. The trade balance is important because it helps show how a country is doing economically and can affect its currency value and overall financial health.