International Trade and Global
Economic Relations
Deficits and Surpluses in the Balance of Payments,
Exchange Rate Movements
Presenters: Mateusz Grodecki, Michał Binek, Tomasz
Derkacz
What is International Trade?
International trade is the
global exchange of goods,
services, and capital,
fostering economic growth
and strengthening global
connection in economics.
Main elements: Exports
(selling goods abroad) and
imports (buying goods from
other countries).
International trade makes
local economies grow and
access to resources not
accesible on local markets
Global Economic
Relations
•
•
•
•
Economic globalization: Integration of
economies worldwide through trade,
investment, and technology.
Key organizations: WTO, IMF, EU shape
trade rules and cooperation, making it
fair.
Impact: Strengthens ties between nations
and supports interdependence.
Exchange rates are the value of one
currency in relation to another. They
change based on economic factors like
inflation, interest rates, and market
demand.
Balance of
Payments
• What is the balance of payments?
The balance of payments is a record of
all economic transactions between a
country and the rest of the world.
• Asymmetries in Balance of
Payments
o Basic Balance: Focuses on the
current account and long-term
capital flows
o Overall Balance: Includes all
components of the balance of
payments
• Deficits and surpluses in different
countries
o Germany and Vietnam – surplus
o India and USA - deficit
o
Deficits vs. Surpluses in the
Balance of Payments
• Deficit in the balance of payments
o Excessive imports
o Issues with foreign debt
• Surplus in the balance of payments
o Growth in foreign currency reserves
o Export income > Import expenses
Currency Exchange
Rate Movements
•
•
•
An exchange rate is the value
of one currency in terms of
another.
Factors influencing exchange
rate fluctuations:
o Economic Indicators
o Market Speculation
o Political Stability
o Supply and Demand
o Balance of Payments
o Government
intervention
Exchange rate fluctuations
have a major impact on the
global economy.
World map of balance ratios
Balance of Payments for United
States
YEN/USD historical chart
EUR/USD historical chart
Key Takeways
01
02
03
International trade is
a crucial element of
the global economy
The balance of
payments and
exchange rates
reflect the economic
health of nations
International
cooperation in
addressing economic
challenges is crucial
for global trade
Sources
•
•
•
•
•
Asymmetries Between Balance of
Payments Surpluses and Deficits International Monetary Fund
https://ideas.repec.org/p/isu/gens
tf/197601010800001033.html Monetary Approach to the Balance
of Payments
https://unctad.org/system/files/o
fficialdocument/tdstat47_FS08_en.pdf
https://www.macrotrends.net/25
50/dollar-yen-exchange-ratehistorical-chart
https://fredblog.stlouisfed.org